Approximate date of commencement of proposed sale to the
public: As soon as practicable after this
registration statement becomes effective.

If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the
following
box. o

If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check
the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o

If this form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o

If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

Smaller reporting company o

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE

Title of Each Class of

Proposed Maximum

Amount of

Securities to be Registered

Aggregate Offering Price(1)

Registration Fee

Common Stock, $0.01 par value per share

$75,000,000.00

$4,185.00

(1)

Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457(o) under the Securities Act
of 1933, as amended.

The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission
acting pursuant to such Section 8(a) may determine.

The
information in this prospectus is not complete and may be
changed. We and the selling stockholders may not sell these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and we and the selling
stockholders are not soliciting offers to buy these securities
in any state where the offer or sale is not permitted.

PROSPECTUS
(Subject to Completion)

Issued ,
2009

Shares

COMMON STOCK

Ancestry.com Inc. is
offering shares
of its common stock and the selling stockholders are
offering shares
of common stock. We will not receive any proceeds from the sale
of shares by the selling stockholders. This is our initial
public offering and no public market currently exists for our
shares. We anticipate that the initial public offering price of
our common stock will be between $
and $ per share.

We expect to apply to list our common stock on either the
Nasdaq Global Select Market or the New York Stock Exchange under
the symbol ACOM.

Investing in the common stock involves risks. See
Risk Factors beginning on page 11.

PRICE $ A SHARE

Underwriting

Price to

Discounts and

Proceeds to

Proceeds to Selling

Public

Commissions

Company

Stockholders

Per Share

$

$

$

$

Total

$

$

$

$

Ancestry.com Inc. and the selling stockholders have granted
the underwriters the right to purchase up to an
additional shares
of common stock to cover over-allotments.

The Securities and Exchange Commission and state securities
regulators have not approved or disapproved these securities, or
determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock
to purchasers on ,
2009.

You should rely only on the information contained in this
prospectus or in any free-writing prospectus we may authorize to
be delivered or made available to you. We have not, the selling
stockholders have not and the underwriters have not authorized
anyone to provide you with additional or different information.
We and the selling stockholders are offering to sell, and
seeking offers to buy, shares of our common stock only in
jurisdictions where offers and sales are permitted. The
information in this prospectus or any free-writing prospectus is
accurate only as of its date, regardless of its time of delivery
or of any sale of shares of our common stock. Our business,
financial condition, results of operations and prospects may
have changed since that date.

Until ,
2009 (25 days after the commencement of this offering), all
dealers that buy, sell or trade shares of our common stock,
whether or not participating in this offering, may be required
to deliver a prospectus. This delivery requirement is in
addition to the obligation of dealers to deliver a prospectus
when acting as underwriters and with respect to their unsold
allotments or subscriptions.

For investors outside the United States: We have not, the
selling stockholders have not and the underwriters have not done
anything that would permit this offering, or possession or
distribution of this prospectus, in any jurisdiction where
action for that purpose is required, other than in the United
States. Persons outside the United States who come into
possession of this prospectus must inform themselves about, and
observe any restrictions relating to, the offering of the shares
of common stock and the distribution of this prospectus outside
of the United States.

This summary highlights information contained elsewhere in
this prospectus and does not contain all of the information that
you should consider in making your investment decision. Before
investing in our common stock, you should carefully read this
entire prospectus, including our consolidated financial
statements and the related notes and the information set forth
under the headings Risk Factors and
Managements Discussion and Analysis of Financial
Condition and Results of Operations, in each case included
elsewhere in this prospectus.

ANCESTRY.COM
INC.

Mission

Ancestry.coms mission is to help everyone discover,
preserve and share their family history.

Overview

Ancestry.com is the worlds largest online resource for
family history, with almost one million paying subscribers
around the world as of June 30, 2009. We have been a leader
in the family history market for over 20 years and have
helped pioneer the market for online family history research. We
believe that most people have a fundamental desire to understand
who they are and from where they came, and that anyone
interested in discovering, preserving and sharing their family
history is a potential user of Ancestry.com. We strive to make
our service valuable to individuals ranging from the most
committed family historians to those taking their first steps
towards satisfying their curiosity about their family stories.

The foundation of our service is an extensive and unique
collection of billions of historical records that we have
digitized, indexed and put online over the past 12 years.
We have developed efficient and proprietary systems for
digitizing handwritten historical documents, and have
established relationships with national, state and local
government archives, historical societies, religious
institutions and private collectors of historical content around
the world. These digital records and documents, combined with
our proprietary online search technologies and tools, enable our
subscribers to research their family history, build their family
trees and make meaningful discoveries about the lives of their
ancestors.

We have built the worlds largest online community of
people interested in their family histories, and we believe that
this network is highly valuable to our subscribers. Our
community is a large and growing source of user-generated
content uniquely focused on family history. Over the past three
years, our registered users have created over 11 million
family trees containing more than 1.1 billion profiles.
They have uploaded and attached to their trees over
22 million photographs, scanned documents, written stories
and audio clips. This growing pool of user-generated content
adds color and context to the family histories assembled from
the digitized historical documents found on Ancestry.com. Our
subscribers also have attached to their trees over
273 million records from our company-acquired content
collection, a process that is helping further organize this
collection by associating specific records with people in family
trees.

In addition, we are beginning to deploy tools and technologies
to facilitate social networking and crowd sourcing, a means of
leveraging collaborative efforts. These tools and technologies
are intended to provide our subscribers with an expanding family
history collaboration network in which insights and discoveries
are shared by relatives, distant and close. Our service also
provides a platform from which our subscribers can share their
stories. Subscribers can invite family and friends to help build
their family trees, add personal memories and upload photographs
and stories of their own.

We provide ongoing value to our subscribers by regularly adding
new historical content, enhancing our websites with new tools
and features and enabling greater collaboration among our users
through the growth of our global community. Our plan to achieve
long-term and sustainable growth is to increase our subscriber
base in the United States and around the world by serving our
loyal base of existing subscribers and by attracting new
subscribers. Our revenues have increased from
$122.6 million in 2004 to $197.6 million in 2008, a
compound annual growth rate of 12.7%.

Societies around the world have historically documented the
names, dates and places associated with important events of
their citizenry. However, due to the vast, dispersed and
disorganized nature of these data collections, the process of
researching family history generally has been time consuming,
painstaking and expensive. The introduction of web-based
technologies greatly enhances opportunities to make family
history research easier, but businesses attempting to leverage
the Internet must tailor their products and services to address
the distinctive challenges of family history research.

The
Ancestry.com Solution

Through the design and development of a unique consumer Internet
application and underlying proprietary technologies, substantial
investment in content and the aggregation of network scale, we
are revolutionizing how people discover, preserve and share
their family history. Our solution includes:

Consumer
Benefits

Easy-to-use
website. Our technology platform makes family
history research and networking easier, more enjoyable and more
rewarding. We seek to make Ancestry.com relevant and easy to use
for both new and experienced subscribers, and we continue to
advance our online tools to help our subscribers efficiently
search our content, organize their research, collaborate with
others and share their stories.

Easy access to comprehensive data sources. We
have aggregated and organized a comprehensive collection of
historical records, with a particular emphasis on records from
the United States, the United Kingdom and Canada. Our
technologies allow subscribers to locate relevant family history
records quickly and easily, resulting in a rewarding experience
for new subscribers and experienced family historians alike.
Subscribers input information that they know about their
relatives, however limited, and can immediately view the vast
content sources available to populate their family trees. Our
proprietary record hinting technology suggests content to our
subscribers, alerting them through hints delivered
online and by email of potential matches to further populate
their trees from our company-acquired and user-generated content.

Valuable community. Our community of family
history enthusiasts is a significant component of our
subscription value proposition. Our subscribers can collaborate,
contribute content and assist each other with family history
research. The publicly available family trees created by our
registered users can provide new subscribers with a substantial
head start researching their families and the opportunity to
connect with relatives interested and engaged in the discovery
and preservation of a shared family lineage.

Competitive
Advantages

Proprietary technology platform provides robust search
capability and ease of use. We have built a
scalable, proprietary technology platform. Our search technology
is designed to deal with the inherent difficulties of searching
historical content. Our record hinting technology locates and
pushes relevant content to our registered users. Our
digitization and indexing processes streamline the complex and
time-consuming task of putting historical records online.

Extensive and accessible content
collection. We have digitized and indexed the
largest online collection of family history records in the
world, with collections from the United States, the United
Kingdom, Australia and Canada, as well as Germany, France,
Italy, Sweden and China. We have invested approximately
$80 million to date in making this content available to
subscribers and continue to invest a substantial amount of time
and money to acquire or license, digitize, index and publish
additional records for our subscribers. In total, our
collections represent over four billion records and an estimated
eight billion names.

Community of dedicated and highly engaged subscribers
enhances our value proposition. We have an active
and dedicated community of subscribers, approximately 45% of
whom have been subscribers continuously for more than two years
as of June 30, 2009. In the six months ended June 2009,
visitors to our websites spent an average of 19.1 minutes
on our websites per usage day, according to monthly data from
comScore. We believe our online community is highly valuable to
our subscribers, because the ever expanding

pool of user-generated content and collaboration and sharing
opportunities can significantly enhance the family history
research process.

Growth
Strategy

Our goal is to remain the leading online resource for family
history and to grow our subscriber base in the United States and
around the world by offering a superior value proposition to
anyone interested in learning more about their family history.
We will focus on retaining our loyal base of existing
subscribers, on acquiring new subscribers and on expanding the
market to new consumers. In pursuit of these goals, we will
continue to focus on the following objectives:

Continue to build our premium brand and drive category
awareness. Over the past three years, we have
expanded and improved our consumer marketing activities in the
United States, which we believe has substantially increased our
brand awareness. We believe that continued investments in
consumer marketing and promotion will allow us to enhance our
premium brand, increase awareness of the family history category
and enhance our ability to acquire new subscribers.

Further improve our product and user
experience. We believe that investments in our
product platform can make family history research easier, more
enjoyable and more accessible. We continuously seek to advance
and improve our core search and hinting technologies, our
document image viewer, our family tree building and viewing
experience and our sharing and publishing capabilities. We
believe that we can leverage the latest web technologies to
further transform the way people discover family history online.

Regularly add new content. A vast universe of
historical records around the world is yet to be digitized, and
we intend to continue to expand our collection of digital
historical records. We will seek to maintain and extend our
existing relationships with archives and other holders of
content throughout the world and to find new sources of unique
family history content. We also plan to continue to promote the
growth of user-generated content by making the Ancestry.com
websites even better places to upload and share personal family
history documents and memories.

Enhance our collaboration technologies. With
almost one million subscribers around the world as of
June 30, 2009, we believe that we have the scale to further
expand our unique family history collaboration network and to
help relatives share insights and discoveries about common
ancestors. We believe that collaboration is a fundamental part
of family history research and that social networking
technologies applied to family history research can provide our
subscribers with even greater value. We intend to make family
history research more collaborative and appealing to a larger
market.

Grow our business internationally. We believe
that our business model of digitizing historical content and
making records available online has appeal in multiple markets
around the world, and we will seek to implement this model in
other international markets. In the third quarter of 2009, we
plan to launch Mundia.com, a lower-priced family history
networking product intended for markets where we do not have a
presence.

Risks
Associated with Our Business

Our business is subject to numerous risks and uncertainties, as
discussed more fully in the section entitled Risk
Factors immediately following this prospectus summary. We
generate substantially all of our revenues from subscriptions to
our products and services, and if our efforts to satisfy, retain
and attract subscribers are not successful, we may experience
higher rates of monthly subscriber churn and our revenues and
profitability could be adversely affected. We face competition
from a number of sources, some of which provide access to
records free of charge. Because of our dependence on family
history products and services for substantially all of our
revenues, factors such as changes in consumer preferences for
our products and challenges in acquiring and making available
online historical content may have a disproportionately greater
impact on us than if we offered multiple products and services.
Our attempts to grow internationally may prove difficult due to,
among other things, legislation in various jurisdictions,
cultural impediments, and costs and difficulties associated with
acquiring relevant content. Additionally, our recent revenue
growth may not be sustainable.

Our principal executive offices are located at 360 West
4800 North, Provo, UT 84604, and our telephone number at that
address is
(801) 705-7000.
Our corporate website address is www.ancestry.com. We do
not incorporate the information contained on, or accessible
through, our corporate website into this prospectus, and you
should not consider it part of this prospectus. We were
originally incorporated in Utah in 1983 under the name Ancestry,
Inc. We changed our name to Ancestry.com, Inc. in July 1998 and
reincorporated in Delaware in November 1998. Our name was
subsequently changed to MyFamily.com, Inc. in November 1999, and
then to The Generations Network, Inc. in November 2006.

We operated as The Generations Network, Inc., which we refer to
as the predecessor, until December 5, 2007. On
December 5, 2007, Generations Holding, Inc., which we refer
to as the successor, acquired The Generations Network, Inc. in
connection with an investment by Spectrum Equity
Investors V, L.P. and certain of its affiliated entities.
The successor was created for the sole purpose of acquiring The
Generations Network, Inc. and had no prior operations. As a
result of that transaction, which we refer to as the Spectrum
investment, Spectrum and certain of its affiliated entities
currently hold approximately 67% of the outstanding shares of
our common stock. As a result of the accounting for the Spectrum
investment, our fiscal year 2007 is divided into a predecessor
period from January 1, 2007 to December 5, 2007 and a
successor period from December 6, 2007 until
December 31, 2007. In some presentations of fiscal year
2007, we have combined these periods solely to enhance the
readers understanding of the results of operations for the
period presented for purposes of comparison to other year end
periods.

In July 2009, to better align our corporate identity with the
premier branding of Ancestry.com, we changed our name to
Ancestry.com Inc. References herein to Ancestry.com,
the company, we, our and
us refer to the operations of Ancestry.com Inc. and
its consolidated subsidiaries in both the predecessor and
successor periods, unless otherwise specified. We are a holding
company, and substantially all of our operations are conducted
by our wholly-owned subsidiary Ancestry.com Operations Inc.,
which we refer to as the operating company, and its
subsidiaries. Our operations consist primarily of our flagship
website Ancestry.com, which is a part of a global family of
websites that includes Ancestry.co.uk, Ancestry.com.au,
Ancestry.ca, Ancestry.de, Ancestry.fr, Ancestry.it and
Ancestry.se. We refer to these websites collectively as the
Ancestry.com websites.

Terminology

In this prospectus we use the terms subscriber, registered user,
record, database and title.

A subscriber is an individual who pays for renewable access to
one of our Ancestry.com websites, and a registered user is a
person who has registered on one of our Ancestry.com websites,
including subscribers.

We use the term record in different ways depending
on the content source. When referring to a number of records in
certain of our company-acquired content collections, such as a
census record, we mean information about each specific person.
For example, a draft card will typically be counted as one
record, as will each line in a census, because each contains
information about a specific individual. When referring to
unstructured data, such as a newspaper, we define each page in
those data sources as a record. When referring to a number of
databases, we mean groups of records we have distinguished as
unique sets based on one or more common characteristics shared
by the records in each set, such as a common time period, place
or subject matter. When referring to a number of titles, we mean
an individual book, directory or newspaper title. For example,
The New York Times counts as a single title, regardless
of the number of editions we have online.

 the remainder for working capital and
other general corporate purposes, which may include the
acquisition of other businesses, products or technologies;
however, we do not have commitments for any acquisitions at this
time.

We will not receive any proceeds from the sale of shares by the
selling stockholders. See Use of Proceeds.

Risk Factors

See Risk Factors for a discussion of factors that
you should consider carefully before deciding whether to
purchase shares of our common stock.

The following tables summarize the consolidated financial and
operating data for the periods indicated. The summary
consolidated statements of operations data presented below for
the periods ended December 31, 2006, 2007 (combined) and
2008 have been derived from our consolidated financial
statements which have been audited by Ernst & Young
LLP, an independent registered public accounting firm and
included elsewhere in this prospectus. In our audited
consolidated financial statements, the year ended
December 31, 2007 is divided into a predecessor period and
a successor period as a result of the accounting for the
Spectrum investment. In the table below, the statement of
operations data for the year ended December 31, 2007
represents the combined results for the predecessor period from
January 1, 2007 through December 5, 2007 and the
successor period from December 6, 2007 through
December 31, 2007. To facilitate a comparison of our annual
results, we combined the predecessor and successor periods in
2007 into a combined 2007 presentation, as we believe this
combination is useful to provide the reader a more meaningful
comparison of our annual periods. This combination is not a
United States generally accepted accounting principles, or GAAP,
measure and it is provided to enhance the readers
understanding of the results of operations for the periods
presented. See Selected Consolidated Financial Data
and our consolidated financial statements and the related notes
included elsewhere in this prospectus. The summary consolidated
statements of operations data for the six month periods ended
June 30, 2008 and 2009 and the balance sheet data at
June 30, 2009 are derived from our unaudited interim
consolidated financial statements included elsewhere in this
prospectus and include all adjustments, consisting of normal and
recurring adjustments, that we consider necessary for a fair
presentation of the financial position and results of operations
as of and for such periods. Operating results for the six months
ended June 30, 2009 are not necessarily indicative of the
results that may be expected for the full 2009 fiscal year. See
Risk Factors and the notes to our consolidated
financial statements included elsewhere in this prospectus. You
should read the summary financial data presented below in
conjunction with our consolidated financial statements, the
notes to our consolidated financial statements and
Managements Discussion and Analysis of Financial
Condition and Results of Operations included elsewhere in
this prospectus.

In connection with the Spectrum
investment, we were recapitalized. As a result, the capital
structure of our predecessor is not comparable to that of the
successor. Accordingly, net income per common share is not
comparable or meaningful for periods prior to 2008 and has not
been presented.

Six Months Ended

Year Ended December 31,

June 30,

Combined

2006

2007

2008

2008

2009

(in thousands)

Other Financial Data:

Adjusted EBITDA

$

30,455

$

43,099

$

62,645

$

31,174

$

34,947

Free cash flow

4,212

15,799

31,712

17,855

14,752

Stock-based compensation expense included in:

Cost of subscription revenues

$

31

$

76

$

80

$

40

$

61

Technology and development

224

283

1,132

504

835

Marketing and advertising

196

306

254

106

169

General and administrative

3,338

310

3,206

1,758

1,738

Total stock-based compensation expense

$

3,789

$

975

$

4,672

$

2,408

$

2,803

Six Months Ended

Year Ended December 31,

June 30,

Combined

2006

2007

2008

2008

2009

Other
Data:(1)

Total subscribers

734,386

832,193

913,683

861,235

990,959

Subscriber additions

569,851

479,663

556,045

272,790

348,955

Monthly
churn(2)

3.5

%

4.0

%

4.2

%

4.1

%

Subscriber acquisition cost

$

49.29

$

70.96

$

71.99

$

71.11

$

67.30

Average monthly revenue per subscriber

$

14.52

$

14.83

$

16.09

$

15.93

$

16.50

(1)

The terms total subscribers,
monthly churn, subscriber acquisition cost and average monthly
revenue per subscriber are defined in the
Managements Discussion and Analysis of Financial
Condition and Results of Operation  Key Business
Metrics section.

(2)

Monthly churn is the average
monthly churn for the quarters included in the periods shown.
Monthly churn is not comparable for the year ended
December 31, 2006 due to a change in the packaging of our
products and services, and accordingly, has not been presented.

We have presented this summary
balance sheet (i) on an actual basis and (ii) on an as
adjusted basis to reflect our sale
of shares
of our common stock in this offering at an assumed initial
public offering price of
$ per share, which is the
midpoint of the range set forth on the cover page of this
prospectus, after deducting estimated underwriting discounts and
commissions and estimated offering expenses payable by us and
the application of the net proceeds of this offering as set
forth herein. Each $1.00 increase or decrease in the assumed
initial public offering price of
$ per share, the midpoint of
the range set forth on the cover page of this prospectus, would
increase or decrease each of cash, cash equivalents and
short-term investments, total assets and total
stockholders equity on an as adjusted basis by
approximately $ million, and
may decrease long-term debt and total liabilities by
approximately $ million,
assuming that the number of shares offered by us, as set forth
on the cover page of this prospectus, remains the same, and
after deducting the estimated underwriting discounts and
commissions and estimated expenses payable by us. The as
adjusted information presented is illustrative only and will
change based on the actual initial public offering price and
other terms of this offering determined at pricing.

Definitions
of Other Financial Data Measures

Adjusted EBITDA. We define adjusted EBITDA as net
income (loss) plus net interest (income) expense; income tax
expense; non-cash charges including depreciation, amortization,
impairment of intangible assets and in-process research and
development acquired in the Spectrum investment and stock-based
compensation expense; other (income) expense and, in 2007 only,
transaction expenses associated with the Spectrum investment.

Adjusted EBITDA and free cash flow are financial measures that
are not calculated in accordance with GAAP. The table below
provides a reconciliation of these non-GAAP financial measures
to net income (loss), the most directly comparable financial
measure calculated and presented in accordance with GAAP.
Adjusted EBITDA and free cash flow should not be considered as
an alternative to net income, income from operations or any
other measure of financial performance calculated and presented
in accordance with GAAP. Our adjusted EBITDA or free cash flow
may not be comparable to similarly titled measures of other
companies because other companies may not calculate adjusted
EBITDA or free cash flow or similarly titled measures in the
same manner as we do. We prepare adjusted EBITDA and free cash
flow to eliminate the impact of items that we do not consider
indicative of our core operating performance. We encourage you
to evaluate these adjustments and the reasons we consider them
appropriate.

Management also uses adjusted EBITDA to evaluate compliance with
the debt covenants in our credit facility, which include an
EBITDA covenant that is substantially similar to adjusted
EBITDA. See Managements Discussion and Analysis of
Financial Condition  Liquidity and Capital
Resources for a description of our credit facility.

We believe adjusted EBITDA and free cash flow are useful to
investors in evaluating our operating performance because
securities analysts use adjusted EBITDA and free cash flow as
supplemental measures to evaluate the overall operating
performance of companies and we anticipate that our investor and
analyst presentations after we are public will include adjusted
EBITDA and free cash flow.

Although adjusted EBITDA and free cash flow are frequently used
by investors and securities analysts in their evaluations of
companies, adjusted EBITDA and free cash flow each have
limitations as an analytical tool, and you should not consider
them in isolation or as a substitute for analysis of our results
of operations as reported under GAAP.

Some of these limitations are:



adjusted EBITDA and free cash flow do not reflect our future
requirements for contractual commitments and adjusted EBITDA
does not reflect our cash expenditures or future requirements
for capital expenditures;

adjusted EBITDA and free cash flow do not reflect the non-cash
component of employee compensation;



although depreciation, amortization and impairment of intangible
assets are non-cash charges, the assets being depreciated or
amortized will often have to be replaced in the future, and
adjusted EBITDA and free cash flow do not reflect any cash
requirements for these replacements;



adjusted EBITDA and free cash flow do not reflect acquired
in-process research and development charges; and



other companies in our industry may calculate adjusted EBITDA or
free cash flow or similarly titled measures differently than we
do, limiting their usefulness as comparative measures.

An investment in our common stock involves a high degree of
risk. You should carefully consider the risks described below
and all of the other information contained in this prospectus
before deciding whether to purchase our stock. Our business,
prospects, financial condition or operating results could be
materially adversely affected by any of these risks, as well as
other risks not currently known to us or that we currently
consider immaterial. The trading price of our common stock could
decline due to any of these risks, and you may lose all or part
of your investment. In assessing the risks described below, you
should also refer to the other information contained in the
prospectus, including our consolidated financial statements and
the related notes, before deciding to purchase any shares of our
common stock.

Risks
Related to Our Business

If our efforts to retain and attract subscribers are not
successful, our revenues will be adversely affected.

We generate substantially all of our revenue from subscriptions
to our products and services. We must continue to retain
existing and attract new subscribers. If our efforts to satisfy
our existing subscribers are not successful, we may not be able
to retain them, and as a result, our revenues would be adversely
affected. For example, if consumers do not perceive our products
and services to be reliable, valuable and of high quality, if we
fail to regularly introduce new and improved products and
services, or if we introduce new products or services that are
not favorably received by the market, we may not be able to
retain existing or attract new subscribers. We rely on our
marketing and advertising efforts, including online and offline
performance-based and fixed-cost programs, to retain existing
subscribers and attract new subscribers. If we are unable to
effectively retain existing subscribers and attract new
subscribers, our business, financial condition and results of
operations would be adversely affected.

The relative service levels, pricing and related features of
competitors to our products and services are some of the factors
that may adversely impact our ability to retain existing
subscribers and attract new subscribers. Some of our current
competitors provide genealogical records free of charge. Some
governments or private organizations may make historical records
available online at no cost to consumers and some commercial
entities could choose to make such records available on an
advertising-supported basis rather than a subscription basis. If
consumers are able to satisfy their family history research
needs at no or lower cost, they may not perceive value in our
products and services. If our efforts to satisfy and retain our
existing subscribers are not successful, we may not be able to
continue to attract new subscribers through
word-of-mouth
referrals. Further, subscriber growth may decrease as a result
of a decline in interest in family history research. Any of
these factors could cause our subscriber growth rate to fall,
which would adversely impact our business, financial condition
and results of operations.

Our
recent revenue growth rate may not be sustainable.

Our revenues have grown rapidly, increasing from
$122.6 million in 2004 to $197.6 million in 2008,
representing a compound annual growth rate of 12.7%. We may not
be able to sustain our recent growth rate in future periods and
you should not rely on the revenue growth of any prior quarterly
or annual periods as an indication of our future performance.

If we
experience excessive rates of subscriber churn, our revenues and
business will be harmed.

We must continually add new subscribers both to replace
subscribers who choose not to renew their subscriptions and to
grow our business beyond our current subscriber base. We
describe the percentage of subscribers who elect not to renew
their subscriptions as subscriber churn. Subscribers
choose not to renew their subscriptions for many reasons,
including a desire to reduce discretionary spending or a
perception that they do not use the service sufficiently, the
service is a poor value, competitive services provide a better
value or experience, or subscriber service issues are not
satisfactorily resolved. Subscribers may choose not to renew
their subscription at any time prior to the renewal date. If we
are unable to attract new subscribers in numbers greater than
our subscriber churn, our subscriber base will decrease and our
business, financial condition and results of operations will be
adversely affected.

If public interest in family history generally or in our
websites specifically were to increase as a result of a
successful marketing and advertising promotion, media focus (for
example, as a result of the potential introduction of the
television show Who Do You Think You Are? in the
United States in early 2010) or other reasons, we could
experience a spike in new subscriptions. We anticipate that this
in turn would result in an increase in our subscriber churn as
our subscriber base would begin to include people who have
varying degrees of interest in family history or limited
experience using online subscription services. For example, in
2006 we experienced an increase in new subscriptions in the
United Kingdom after the airing of Who Do You Think You
Are? on the BBC. If our subscriber churn increases, we may
be required to increase the rate at which we add new subscribers
in order to maintain and grow our revenues. If excessive numbers
of subscribers cancel our service, we may be required to incur
significantly higher marketing and advertising expenses than we
currently anticipate to replace these subscribers with new
subscribers. A significant increase in our subscriber churn
would have an adverse effect on our business, financial
condition and results of operations.

Because we recognize revenues from subscriptions to our
service over the term of the subscription, downturns or upturns
in subscription sales may not be immediately reflected in our
operating results.

We recognize revenues from subscribers ratably over the term of
their subscriptions. Given the mix of annual subscriptions, a
large portion of our revenues for each quarter reflects deferred
revenue from subscription agreements entered into during
previous quarters. Consequently, a decline in new or renewed
subscriptions in any one quarter will not necessarily be fully
reflected in the revenues in that quarter but will negatively
affect our revenues in future quarters. Accordingly, the effect
of significant downturns or upturns in subscription sales or
market acceptance of our service, or changes in subscriber
churn, may not fully impact our results of operations until
future periods.

Because we generate substantially all of our revenue from
online family history resources, particularly in the United
States and United Kingdom, a decline in demand for our products
or services or for online family history resources in general,
and particularly of the United States and United Kingdom, could
cause our revenue to decline.

We generate substantially all of our revenue from our online
family history products and services, and we expect that we will
continue to depend upon our online family history products and
services for substantially all of our revenue in the foreseeable
future. Because we are dependent on our online family history
products and services, factors such as changes in consumer
preferences for these products may have a disproportionately
greater impact on us than if we offered multiple products and
services. The market for online family history resources, and
for consumer products and services in general, is subject to
rapidly changing consumer demand and trends in preferences. If
consumer interest in our online family history products and
services declines, or if consumer interest in family history in
general declines, we would likely experience a significant loss
of revenue. Some of the potential factors that could affect
interest in and demand for online family history products and
services include:



individuals interest in, and their willingness to spend
time and money, conducting family history research;



availability of discretionary funds;



awareness of our brand and the family history category;



the appeal and reliability of our products and services;



the price, performance and availability of competing family
history products and services;



public concern regarding privacy and data security;



our ability to maintain high levels of customer
satisfaction; and



the rate of growth in online commerce generally.

In addition, we recognize substantially all of our revenues from
subscribers in the United States, the United Kingdom, and
to a lesser extent, Australia and Canada. Consequently, a
decrease of interest in and demand

for online family history products and services in these
countries could have a disproportionately greater impact on us
than if our geographic mix of revenue was less concentrated.

A change in our mix of subscription durations could have a
significant impact on our revenue and churn.

A majority of our subscribers have annual subscriptions. At any
point in time, however, the majority of new subscribers
generally sign up for monthly subscriptions, and may or may not
choose to renew or convert to an annual subscription. We
generally experience higher rates of churn for monthly
subscribers than for annual subscribers. If the percentage of
overall subscribers that are monthly subscribers increases, an
increasing part of our revenue would become dependent on monthly
renewals, and we would likely have greater churn. We continually
evaluate the types of subscriptions that are most appropriate
for us and our subscribers. As we make these evaluations, we may
more aggressively market subscriptions that are shorter than our
annual subscriptions. Any material change in our mix of
subscription duration could have a significant impact on our
revenue and churn.

Challenges in acquiring historical content and making it
available online could adversely affect our business.

In order to retain and expand our subscriber base, both
domestically and internationally, we must continue to expend
significant resources to acquire significant amounts of
additional historical content, digitize it and make it available
to our subscribers online. We face legal, logistical and
cultural challenges in acquiring new historical content.
Relevant governmental records may be widely dispersed and held
at a national, state or local level. Religious and private
records are even more widely dispersed. These problems often
pose particular challenges in acquiring content internationally.
For example, content in Germany is highly dispersed, and
legislation in France is particularly stringent. Desirable
content may not be available to us on favorable terms, or at
all, due to competition for a particular collection, privacy
concerns relative to information contained in a given collection
or our lack of negotiating leverage with a certain content
provider. For example, some of our most popular databases
include so-called vital records content 
namely, birth, marriage and death records made available by
certain governmental agencies. To help prevent identity theft,
or even terrorist activities, governments may attempt to
restrict the release of all or substantial portions of their
vital records content, and particularly birth records, to third
parties. If these efforts are successful, it may limit or
altogether prevent us from acquiring these types of vital record
content or continuing to make them available online. In many
cases, we will be the first commercial entity that may have
approached the keeper of the records, often a governmental body.
In some cases, we have to lobby for legislation to be changed to
enable government or other bodies to grant us access to records.

While we own most of the images in our database, we generally do
not own the underlying historical documents. If owners of
content have sold or licensed it for digitization purposes on an
exclusive basis to a third party, we would not be able to
acquire this content. The owners of such historical records
generally can allow one or more parties to digitize those
records. If owners of content have sold or licensed the rights
to digitize that content, even on a non-exclusive basis, they
often elect not to sell or license it for digitization purposes
to any other person. Therefore, if one of our competitors
acquires rights to digitize a set of content, even on a
non-exclusive basis, we may be unable to acquire rights to
digitize that content collection. In some cases, acquisition of
content involves competitive bidding, and we have in the past
and may in the future choose not to bid or not successfully bid
to acquire content rights. In addition, a number of governmental
bodies and other organizations are interested in making
historical content available for free and owners of historical
records may license or sell their records to such governmental
bodies and organizations in addition to or instead of licensing
or selling their content to us. Our inability to offer vital
records or other valuable content as part of our family history
research databases or the widespread availability of such
content elsewhere at lower cost or for free could result in our
subscription products and services becoming less valuable to
consumers, which could have an adverse impact on our number of
subscribers or subscriber churn, and therefore on our business,
financial condition and results of operations.

We depend in part upon third party licenses for some of
our historical content, and a loss of those licenses could
adversely affect our business.

Though we own most of the images in our databases, in some cases
on a non-exclusive basis, we acquire a portion of our content
pursuant to ongoing license agreements. Some of these agreements
have finite terms and we may not be able to renew the agreements
on terms that are advantageous to us or at all. For example, we
license a

significant amount of our United Kingdom content from the United
Kingdom National Archives under license agreements that
generally have ten year terms, with varying automatic extension
periods. These agreements with the United Kingdom National
Archive expire from 2012 to 2019. Some of these agreements
permit the United Kingdom National Archives to terminate
these licenses if we undergo a change of control.

If a current or future license for a significant content
collection were to be terminated, we may not be able to obtain a
new license on terms advantageous to us or at all and we could
be required to remove the relevant content from our websites,
either immediately or after some period of time. If we were
required to remove a material amount of content from our
websites, as a result of the termination of one or more
licenses, it could adversely affect our business and results of
operations. Some of these license agreements restrict the manner
in which we use the applicable content, which could limit our
ability to leverage that content for new uses as we expand our
business. We pay royalties under some of these license
agreements, and the other party to those royalty-bearing
agreements may have a right to audit the calculation of our
royalty payments. If there were to be a disagreement regarding
the calculation of royalty payments, we could be required to
make additional payments under those agreements. We also have
indemnification obligations under many of these agreements.
While we have not experienced any claims to date, we could
experience claims in the future which, if material, could have a
negative impact on our results of operations and financial
condition.

Digitizing and indexing new content can take a significant
amount of time and expense, and can expose us to risks
associated with the loss or damage of historical
documents.

Digitizing and indexing new historical content can take a
significant amount of time and expense and we generally incur
the expenses related to such content significantly in advance of
the time we can make it available to our subscribers. We have
invested approximately $80 million in content to date and
expect to continue to spend significant resources on content.
Increases in the cost or time required to digitize and index new
content could harm our financial results. In 2008, one of our
transcription vendors, Beijing Formax, performed a majority of
our data transcription as measured by cost. We do not have long
term contracts with any of our transcription vendors. If we were
to replace that transcription vendor or any other transcription
vendor for any reason, we would be required to provide extensive
training to the new vendor, which could delay our ability to
make our new content available to our subscribers, and our
relationships with the new transcription vendors may be on
financial or other terms less favorable to us than our existing
arrangements. Our inability to maintain or acquire content or to
make new content available online in a timely and cost-effective
manner would have an adverse effect on our business, financial
condition and results of operations.

In addition, if we acquire content that ultimately generates
only minimal subscriber interest, the cost of acquiring and
processing that content may exceed the incremental revenues
produced by the content, which would adversely affect our
profitability. For example, we took an impairment charge with
respect to content acquired for our China-focused website after
we shifted our strategy for that market.

While we are digitizing borrowed content, we may be in
possession of valuable and irreplaceable original historical
documents. While we maintain insurance with respect to such
documents, any loss or damage to such documents, while in our
possession, could cause us significant expense and could have a
material adverse effect on our reputation and the potential
willingness of content owners to sell, license or lend their
content to us.

We face competition from a number of different
sources.

We face competition in our business from a variety of online and
offline organizations, some of which provide genealogical
records free of charge. We expect competition to increase in the
future. We generally compete on the basis of content, price,
technology, ease of use, brand recognition, breadth of products,
service and support, and the number of network members with whom
other members can collaborate.

Ancestry.com and our similar international websites face
competition from:



FamilySearch, and its website FamilySearch.org, a genealogy
organization that is part of The Church of Jesus Christ of
Latter-day
Saints. The Church of Jesus Christ of
Latter-day
Saints has, for over 100 years, actively gathered,
preserved and shared genealogical records worldwide.
FamilySearch has an extensive

collection of paper and microfilm records (more than
2.3 million rolls of microfilm and 180,000 sets of
microfiche), which it maintains in a central storage facility in
Utah. FamilySearch has digitized a large quantity of these
records and has published them online at FamilySearch.org, where
it makes them available to the public for free and through over
4,500 family history centers located throughout the world.
FamilySearch is a well funded organization and has stated its
intention to undertake a massive digitization project to bring
most of its collection online over the next few years.



Commercial entities, including online genealogical research
services, library content distributors, search engines and
portals, retailers of books and software related to genealogical
research and family tree creation and family history oriented
social networking websites.



Other non-profit entities and organizations, genealogical
societies, governments and agencies that may make vital
statistics or other records available to the public for free.

As we continue to diversify our breadth of products and services
and expand internationally, we expect our competition to expand
to include other Internet-based and offline businesses,
governments and other entities. Our current and future
competitors may have greater resources, more well-established
brand recognition or more sophisticated technologies, such as
search algorithms, than we do or may more easily obtain relevant
records in international markets. Additionally, our current and
future competitors may offer new categories of content, products
or services before us, or at lower prices, which may give them a
competitive advantage in attracting subscribers. Our current and
future competitors may make historical records available online
at no cost or on an advertising-supported basis rather than a
subscription basis. Our future competitors and their products
and services may be superior to any of our current competition.
To compete effectively, we may need to expend significant
resources on content acquisition, technology or marketing and
advertising. We currently plan to distinguish ourselves from our
competitors on the basis of access to content, technological
leadership and the depth of our subscriber community. These
efforts may be expensive and could reduce our margins, which
could have a material adverse effect on our business, financial
condition and results of operations.

Competitive
pricing pressures could harm our business and results of
operations.

Demand for our products and services is sensitive to price. Many
external factors, including our marketing, content acquisition
and technology costs and our competitors pricing and
marketing strategies, can significantly affect our pricing
strategies, particularly in markets outside the United States.
Some of our competitors provide genealogical records free of
charge. If we fail to meet our subscribers pricing
expectations, we could fail to retain existing or attract new
subscribers, either of which would harm our business and results
of operations. Changes in our pricing strategies could have a
significant impact on our revenues and net income.

Our growth could strain our personnel, technology and
infrastructure resources, and if we are unable to implement
appropriate controls and procedures to manage our growth, we may
not be able to successfully implement our business plan.

Our growth in operations has placed a significant strain on our
management, administrative, technological, operational and
financial infrastructure. Anticipated future growth, including
growth related to the broadening of our product and service
offerings and our expansion into new geographic areas, will
continue to place similar strains on our personnel, technology
and infrastructure. A sudden increase in our number of
registered users could strain our capacity and result in website
performance issues. Our success will depend in part upon the
management ability of our officers with respect to growth
opportunities. To manage the expected growth of our operations,
we will need to continue to improve our operational, financial,
technological and management controls and our reporting systems
and procedures. Additional capital investments will increase our
cost base, which will make it more difficult for us to offset
any future revenue shortfalls by offsetting expense reductions
in the short term. If we fail to successfully manage our growth,
it could adversely affect our business, financial condition and
results of operations.

Any significant disruption in service on our websites or
in our computer systems, which are currently hosted primarily by
a single third-party, could result in a loss of
subscribers.

Registered users access our service through our websites, where
our family history research databases are located, and our
internal billing software and operations are integrated with our
product and service offerings. Our brand, reputation and ability
to attract, retain and serve our subscribers is dependent upon
the reliable performance of our websites, network
infrastructure, content delivery processes and payment systems.
We have experienced interruptions in these systems in the past,
including server failures that temporarily slowed down our
websites performance and access to content, or made our
websites inaccessible, and we may experience interruptions in
the future. Interruptions in these systems, whether due to
system failures, computer viruses or physical or electronic
break-ins, could affect the security or availability of our
websites and prevent our registered users from accessing our
data and using our products and services. Problems with the
reliability or security of our systems may require disclosure to
our lenders and could harm our reputation, and damage to our
reputation and the cost of remedying these problems could
negatively affect our business, financial condition and results
of operations.

Substantially all of our communications, network and computer
hardware used to operate our websites are co-located in a
facility in Utah. We do not own or control the operation of this
facility. We are establishing a redundant system in Denver,
Colorado, and we expect to complete this project within the next
12 months. Our systems and operations are vulnerable to damage
or interruption from fire, flood, power loss, telecommunications
failure, terrorist attacks, acts of war, electronic and physical
break-ins, computer viruses, earthquakes and similar events. The
occurrence of any of the foregoing events could result in damage
to our systems and hardware or could cause them to fail
completely, and our insurance may not cover such events or may
be insufficient to compensate us for losses that may occur. Our
systems are not yet redundant, so a total failure of our system
could cause our websites to be inaccessible by our registered
users. Problems faced by our third-party web hosting provider,
with the telecommunications network providers with whom it
contracts or with the systems by which it allocates capacity
among its customers, including us, could adversely affect the
experience of our subscribers. Our third-party web hosting
provider could decide to close its facilities without adequate
notice. In addition, any financial difficulties, such as
bankruptcy reorganization, faced by our third-party web hosting
provider or any of the service providers with whom it contracts
may have negative effects on our business, the nature and extent
of which are difficult to predict. Additionally, if our
third-party web hosting provider is unable to keep up with our
growing needs for capacity, this could have an adverse effect on
our business. Any errors, defects, disruptions or other
performance problems with our services could harm our reputation
and have an adverse effect on our business, financial condition
and results of operations.

Our
operating results may fluctuate from quarter to quarter, which
could make them difficult to predict.

Our quarterly operating results are tied to certain financial
and operational metrics that have fluctuated in the past and may
fluctuate significantly in the future. As a result, you should
not rely upon our past quarterly operating results as indicators
of future performance. Our operating results depend on numerous
factors, many of which are outside of our control. In addition
to the other risks described in this Risk Factors
section, the following risks could cause our operating results
to fluctuate:



our ability to retain existing subscribers and attract new
subscribers;



the mix of annual and monthly subscribers at any given time;



timing and amount of costs of new and existing marketing and
advertising efforts;



timing and amount of operating costs and capital expenditures
relating to expansion of our business, operations and
infrastructure, including content acquisition and international
expansion costs;



the cost and timing of the development and introduction of new
product and service offerings by us or our competitors;

For these or other reasons, the results of any prior quarterly
or annual periods should not be relied upon as indications of
our future performance and our revenue and operating results in
future quarters may differ materially from the expectations of
management or investors.

We require a significant amount of cash to service our
indebtedness, which reduces the cash available to finance our
organic growth and strategic acquisitions, alliances and
collaborations.

We have a significant amount of indebtedness, as described in
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Liquidity and
Capital Resources. Our indebtedness could:



make us more vulnerable to unfavorable economic conditions;



make it more difficult to obtain additional financing in the
future for working capital, capital expenditures or other
general corporate purposes;



limit our flexibility in planning for, or reacting to, changes
in our business and the markets in which we operate;



require us to dedicate or reserve a large portion of our cash
flow from operations for making payments on our indebtedness,
which would prevent us from using it for other purposes;



make us susceptible to fluctuations in market interest rates
that affect the cost of our borrowings to the extent that our
variable rate debt is not covered by interest rate derivative
agreements; and



make it more difficult to pursue strategic acquisitions,
alliances and collaborations.

Our existing credit facility contains a number of financial and
operating covenants which could limit our flexibility in
operating our business. For example, our credit facility limits
our capital expenditures, which limits the amount we can spend
on content acquisition, and it limits the amount we can pay when
acquiring companies. These restrictions and covenants, among
other things, limit our ability to: incur additional
indebtedness; make investments; pay dividends or make
distributions to our stockholders; grant liens on our assets;
sell assets; enter into a new or different line of business;
enter into transactions with our affiliates; acquire, merge or
consolidate with other entities or transfer all or substantially
all of our assets; and enter into sale and leaseback
transactions. Our failure to comply with any covenant could
result in a default under the credit facility. Our ability to
service our indebtedness and comply with the covenants will
depend on our future performance, which will be affected by
prevailing economic conditions and financial, business,
regulatory and other factors. Some of these factors are beyond
our control. We believe that, based upon current levels of
operations, we will be able to comply with the covenants in our
credit facility and meet our debt service obligations when due.
Significant assumptions underlie this belief including, among
other things, that we will continue to be successful in
implementing our business strategy and that there will be no
material adverse developments in our business, liquidity or
capital requirements. If we cannot generate sufficient cash flow
from operations to service our indebtedness and to meet our
other obligations and commitments, we might be required to
refinance our debt or to dispose of assets to obtain funds for
such purpose. We cannot assure you that refinancings or asset
dispositions could be effected on a timely basis or on
satisfactory terms, if at all, or would be permitted by the
terms of our debt instruments.

Our obligations under the existing credit facility are secured
by collateral, which includes substantially all of our assets,
including our intellectual property. If we are not able to
satisfy our obligations under the credit facility, the creditors
could exercise their rights under the credit facility, which
include taking control of the collateral, including our
intellectual property, which would have a material adverse
effect on our business.

Depending on the size of the offering, we may be required to use
25% of the net proceeds we receive to repay a portion of the
amount outstanding under our credit facility. After application
of the net proceeds, our aggregate indebtedness as
of ,
2009 will be $ million.

We may need additional capital, and we cannot be certain
that additional financing will be available.

We have funded our operations and capital expenditures primarily
from cash flow from operations during the last five years. In
connection with the Spectrum investment, we incurred a
significant amount of indebtedness. Although we currently
anticipate that our available funds and cash flow from
operations will be sufficient to meet our cash needs for at
least the next 12 months, we may require additional
financing in the future. Our ability to obtain financing will
depend, among other things, on our development efforts, business
plans, operating performance and condition of the capital
markets at the time we seek financing. Additional financing may
not be available to us on favorable terms, or at all, when
required. The ongoing financial stress affecting the banking
system and financial markets and the going concern threats to
financial institutions could make it more difficult for us to
obtain additional financing if we should require it. CIT Lending
Services Corporation, one of the lenders in the lending
syndicate for the revolving portion of our credit facility, has
recently suffered financial difficulties, according to media
reports. If it or any other of the financial institutions that
are in the syndicate for the revolving portion of our credit
facility were to suffer financial difficulties or enter
bankruptcy, it could affect our ability to draw down on that
facility. If we raise additional funds through the issuance of
equity, equity-linked or debt securities, those securities may
have rights, preferences or privileges senior to the rights of
our common stock, and our stockholders may experience dilution.
If we are unable to obtain adequate financing or financing on
terms satisfactory to us when we require it, our ability to
service our outstanding indebtedness, to continue to support our
business growth and to respond to business challenges could be
significantly limited.

If our marketing and advertising efforts fail to generate
additional revenues on a cost-effective basis, or if we are
unable to manage our marketing and advertising expenses, our
business will suffer.

Our future growth and profitability, as well as the maintenance
and enhancement of our brands, will depend in large part on the
effectiveness and efficiency of our marketing and advertising
expenditures. We use a diverse mix of online and offline
performance-based and fixed-cost marketing and advertising
programs to promote our products and services and we
periodically adjust our mix of marketing and advertising
programs. Significant increases in the pricing of one or more of
our marketing and advertising channels would increase our
marketing and advertising expense or cause us to choose less
expensive but less effective marketing and advertising channels.
As we implement new marketing and advertising strategies and
phase out older strategies, we may need to expand into marketing
and advertising channels with significantly higher costs than
our current channels, which could adversely affect our
profitability. Further, we may over time become
disproportionately reliant on one channel or partner, which
would limit our marketing and advertising flexibility and could
increase our operating expenses. We may incur marketing and
advertising expenses significantly in advance of the time we
anticipate recognizing revenue associated with such expenses,
and our marketing and advertising expenditures may not result in
increased revenue or generate sufficient levels of brand
awareness. For example, we have purchased product integration in
the television show Who Do You Think You Are? in the
United States, but we may only at a later date, or never,
experience an increase in revenue or brand awareness as a result
of such expenditures. If we are unable to maintain our marketing
and advertising channels on cost-effective terms or replace
existing marketing and advertising channels with similarly
effective channels, our marketing and advertising expenses could
increase substantially, our subscriber levels could be affected
adversely, and our business, financial condition and results of
operations may suffer.

We anticipate that as we market our products and services to a
broader market, including people who may not be Internet-savvy
or may be new to family history research, we may be required to
develop new, more costly online and offline advertising
channels, such as television advertising. Such expanded efforts
may yield fewer new subscriptions per marketing and other
greater advertising expenditures than our strategies to date. We
may decide to expand our international marketing and advertising
efforts, which will lead to a significant increase in our
marketing and advertising expenses. Any of these additional
expenses may not result in sufficient customer growth to offset
cost, which would have an adverse effect on our business,
financial condition and results of operations.

If we are unable to improve market recognition of and
loyalty to our brands, or if our reputation were to be harmed,
our business may be adversely affected.

We believe that maintaining and enhancing our Ancestry.com and
other brands is critical to our success. We believe that the
importance of brand recognition and loyalty will only increase
in light of increasing competition in our markets. We plan to
continue to promote our brands, both domestically and
internationally, but there is no guarantee that our selected
strategies will increase the favorable recognition of our
brands. Some of our existing and potential competitors,
including search engines, media companies and government and
religious institutions have well-established brands with greater
brand recognition than we have. Additionally, from time to time,
our subscribers express dissatisfaction with our service,
including, among other things, dissatisfaction with our
auto-renewal and other billing policies, our handling of
personal data and the way our services operate. To the extent
that dissatisfaction with our service is widespread or not
adequately addressed, our brand may be adversely impacted. If
our efforts to promote and maintain our brand are not
successful, our operating results and our ability to attract and
retain subscribers may be adversely affected. In addition, even
if our brand recognition and loyalty increases, this may not
result in increased use of our products and services or higher
revenues. Many of our subscribers are passionate about family
history research, and many of these subscribers participate in
blogs on this topic both on our websites and elsewhere. If
actions we take or changes we make to our products upset these
subscribers, their blogging could negatively affect our brand
and reputation. We have a limited operating history, and you
should not rely upon our historic growth rates as an indicator
of future growth.

Online family history research is a relatively new industry and
our operational history in the online family history research
industry is also relatively limited. Consequently, it is
difficult to predict the ultimate size of the industry and the
acceptance by the market of our products and services. Our
business strategy and projections rely on a number of
assumptions, some or all of which may be incorrect. For example,
we believe that consumers will be willing to pay for
subscriptions to our online family history resources,
notwithstanding the fact that some of our current and future
competitors provide such resources free of charge. We cannot
accurately predict whether our products and services will
achieve significant acceptance by potential users in
significantly larger numbers than at present. You should
therefore not rely on our historic growth rates as an indication
of future growth.

Our business could be adversely affected if our
subscribers are not satisfied with our products and
services.

Our business depends on our ability to satisfy our subscribers.
Our subscribers satisfaction may be negatively impacted by
factors that are actual or perceived by them, such as
limitations in our technologies, changes in our products and
services, interruptions or slowness in online capacity of our
websites, privacy and data security concerns, speed of search of
our online content and relevance of search results, as well as
perceived ease of search, and our automatic subscription renewal
by credit card policy, including any perceptions of credit card
fraud. If we do not handle subscriber complaints effectively,
our brand and reputation may suffer, we may lose our
subscribers confidence, and they may choose not to renew
their subscriptions. Complaints or negative publicity about our
products, services or billing practices could adversely impact
our business, financial condition and results of operations.

Our promotional offerings and our introduction of new
products may have unintended effects on the demand for our
products and services.

Many of our promotional offerings involve temporary free access
to our data. By granting temporary free access to many of our
records, and permanent free access to a smaller set of our
records, we may provide sufficient access to some registered
users who are not subscribers to satisfy their family history
needs, and may therefore fail to generate additional revenues as
intended. Additionally, alternative subscriptions with terms of
less than one year, such as monthly subscriptions and
pay-per-view
offerings, may result in fewer annual subscriptions from both
new and existing subscribers and lower revenues per subscriber
over time. If any of these products or offerings has the effect
of reducing our long-term subscriber base or total number of
subscriptions, our revenues may decrease over time and our
business may suffer.

We face many risks associated with our plans to continue
to expand our international offerings and marketing and
advertising efforts, which could harm our business, financial
condition and results of operations.

In addition to our United States and United Kingdom websites,
since 2006, we have launched websites directed at Australia,
Canada, Germany, France, Italy, Sweden and China and plan to
launch our global,
multi-language
Mundia.com website later this year. For the six months ended
June 30, 2009, approximately 34% of subscribers to our
Ancestry.com websites, and approximately 24% of our revenues
from subscribers, were from locations outside the United States.
We anticipate that our continuing international expansion will
entail the marketing and advertising of our products, services
and brands, and the development of localized websites. We may
not succeed in these efforts and achieve our subscriber
acquisition or other goals. For some international markets,
customer preferences and buying behaviors may be different, and
we may use business models that are different from our
traditional subscription model that provides company-acquired
content to subscribers. Our revenues from new foreign markets
may not exceed the costs of establishing, marketing and
maintaining our international offerings, and therefore may not
be profitable on a sustained basis. We will be subject to risks
of doing business internationally, including the following:



difficulties in developing and marketing our offerings and
brands as a result of distance, language and cultural
differences;



foreign currency exchange rate fluctuations;



more stringent consumer and data protection laws;



local socio-economic and political conditions;



technical difficulties and costs associated with the
localization of our service offerings;



strong local competitors;



lack of experience in certain geographical markets;



different and conflicting legal and regulatory regimes;



changes in governmental regulations;



different and conflicting intellectual property laws;



difficulties in staffing and managing international
operations; and



risk of business or user fraud.

One or more of these factors could harm our business, financial
condition and results of operations.

If we are unable to continually enhance our products and
services and adapt them to technological changes and subscriber
needs, our business may suffer.

Our business is rapidly changing. To remain competitive, we must
continue to provide relevant content and enhance and improve the
functionality and features of our products and services. If
competitors introduce new solutions embodying new technologies,
our existing products and services may become obsolete. Our
future success will depend, among other things, on our ability
to:



anticipate demand for new products and services;



enhance our existing solutions; and



respond to technological advances on a cost-effective and timely
basis.

Developing the technologies in our products entails significant
technical and business risks. We may use new technologies
ineffectively, or we may fail to adapt our products and services
to the demands of our subscribers. If we face material delays in
introducing new or enhanced solutions, our subscribers may
forego the use of our solutions in favor of those of our
competitors.

Undetected product or service errors or defects could
result in the loss of revenues, delayed market acceptance of our
products or services or claims against us.

We offer a variety of Internet-based products and a software
product, Family Tree Maker, all of which are complex and
frequently upgraded. Our Internet-based products and software
product may contain undetected errors, defects, failures or
viruses, especially when first introduced or when new versions
or enhancements are released. Despite product testing, our
products, or third party products that we incorporate into ours,
may contain undetected errors, defects or viruses that could,
among other things:



require us to make extensive changes to our subscription
products and services or software product, which would increase
our expenses;

generate negative publicity regarding us and our subscription
products and software product; or



result in subscribers delaying their subscription or software
purchase or electing not to renew their subscriptions.

Any of these occurrences could have a material adverse effect
upon our business, financial condition and results of operations.

Privacy
concerns could require us to modify our
operations.

As part of our business, we make biographical and historical
data available through our websites, we use registered
users personal data for internal purposes and we host
websites and message boards, among other things, that contain
content supplied by third parties. In addition, in connection
with our Ancestry.com | DNA product, we obtain biological
DNA samples used for genetic testing. For privacy or security
reasons, privacy groups, governmental agencies and individuals
may seek to restrict or prevent our use or publication of
certain biological or historical information pertaining to
individuals, particularly living persons. We will also face
additional privacy issues as we expand into other international
markets, as many nations have privacy protections more stringent
than those in the United States. We have incurred, and will
continue to incur, expenses to comply with privacy and security
standards and protocols imposed by law, regulation, industry
standards or contractual obligations. Increased domestic or
international regulation of data utilization and distribution
practices, including self-regulation, could require us to modify
our operations and incur significant expense, which could have
an adverse effect on our business, financial condition and
results of operations.

Our possession and use of personal information presents
risks and expenses that could harm our business. Unauthorized
disclosure or manipulation of such data, whether through breach
of our network security or otherwise, could expose us to costly
litigation and damage our reputation.

Maintaining our network security is of critical importance
because our online systems store confidential registered user,
employee and other sensitive data, such as names, addresses,
credit card numbers and other personal information. In
particular, a substantial majority of our subscribers use credit
and debit cards to purchase our products and services. If we or
our processing vendors were to have problems with our billing
software, it could have an adverse effect on our subscriber
satisfaction and could cause one or more of the major credit
companies to disallow our continued use of their payment
products. In addition, if our billing software fails to work
properly and, as a result, we do not automatically charge our
subscribers credit cards on a timely basis or at all, our
business, financial condition and results of operations could be
adversely affected.

In addition, our online systems store the content that our
registered users upload onto our websites, such as family
records and photos. This content is often personally meaningful,
and our registered users may rely on our online system to store
digital copies of such content. If we were to lose such content,
if our users private content

were to be publicly available or if third parties were able to
access and manipulate such content, we may face liability and
harm to our brand and reputation.

We and our vendors use commercially available encryption
technology to transmit personal information when taking orders.
We use security and business controls to limit access and use of
personal information, including registered users uploaded
content. However, third parties may be able to circumvent these
security and business measures by developing and deploying
viruses, worms and other malicious software programs that are
designed to attack or attempt to infiltrate our systems and
networks. In addition, employee error, malfeasance or other
errors in the storage, use or transmission of personal
information could result in a breach of registered user or
employee privacy.

If third parties improperly obtain and use the personal
information of our registered users or employees, we may be
required to expend significant resources to resolve these
problems. A major breach of our network security and systems
could have serious negative consequences for our businesses,
including possible fines, penalties and damages, reduced demand
for our products and services, an unwillingness of subscribers
to provide us with their credit card or payment information, an
unwillingness of registered users to upload family records or
photos onto our websites, harm to our reputation and brand and
loss of our ability to accept and process subscriber credit card
orders. Similarly, if a well-publicized breach of data security
at any other major consumer website were to occur, there could
be a general public loss of confidence in the use of the
Internet for commercial transactions. Any of these events could
have material adverse effects on our business, financial
condition and results of operations.

We may
face risks related to activities of registered
users.

Our registered users often upload their own content onto our
websites. The terms of use of such content are set forth in the
terms and conditions of our websites and a submission agreement
that registered users agree to when they upload their content.
Disputes or negative publicity about the use of such content
could make members more reluctant to upload personal content or
harm our reputation. We do not review or monitor content
uploaded by our registered users, and could face claims arising
from or liability for making any such content available on our
websites. In addition, our collaboration tools and other
features of our site allow registered users to contact each
other. While registered users can choose to remain anonymous in
such communications, registered users may choose to engage with
one another without anonymity. If any such contact were to lead
to fraud or other harm, we may face claims against us and
negative publicity. Litigation to defend these claims or efforts
to counter any negative publicity could be costly and any other
liabilities we incur in connection with any such claims may harm
our business, financial condition and results of operations.

Increases in credit card processing fees would increase
our operating expenses and adversely affect our results of
operations, and the termination of our relationship with any
major credit card company would have a severe, negative impact
on our business.

The substantial majority of our subscribers pay for our products
and services using credit cards. From time to time, the major
credit card companies or the issuing banks may increase the fees
that they charge for each transaction using their cards. An
increase in those fees would require us to either increase the
prices we charge for our products, or suffer a negative impact
on our profitability, either of which could adversely affect our
business, financial condition and results of operations.

In addition, our credit card fees may be increased by credit
card companies if our chargeback rate, or the rate of payment
refunds, exceeds certain minimum thresholds. If we are unable to
maintain our chargeback rate at acceptable levels, our credit
card fees for chargeback transactions, or for all credit card
transactions, may be further increased, and, if the problem
significantly worsens, credit card companies may increase our
fees or terminate their relationship with us. Any increases in
our credit card fees could adversely affect our results of
operations, particularly if we elect not to raise our
subscription rates to offset the increase. The termination of
our ability to process payments on any major credit or debit
card would significantly impair our ability to operate our
business.

If government regulation of the Internet or other areas of
our business changes or if consumer attitudes toward use of the
Internet change, we may need to change the manner in which we
conduct our business or incur greater operating expenses.

The adoption, modification or interpretation of laws or
regulations relating to the Internet or other areas of our
business could adversely affect the manner in which we conduct
our business or the overall popularity or growth in use of the
Internet. Such laws and regulations may cover automatic
subscription renewal, credit card processing procedures, sales
and other procedures, tariffs, user privacy, data protection,
pricing, content, copyrights, distribution, electronic
contracts, consumer protection, broadband residential Internet
access and the characteristics and quality of services. In
foreign countries, such as countries in Europe, such laws may be
more restrictive than in the United States. It is not clear how
existing laws governing issues such as property ownership, sales
and other taxes, libel and personal privacy apply to the
Internet. If we are required to comply with new regulations or
legislation or new interpretations of existing regulations or
legislation, this compliance could cause us to incur additional
expenses, make it more difficult to renew subscriptions
automatically, make it more difficult to attract new subscribers
or otherwise alter our business model. Any of these outcomes
could have a material adverse effect on our business, financial
condition or results of operations.

Our revenues may be adversely affected if we are required
to charge sales taxes in additional jurisdictions and/or other
taxes for our products and services.

We collect or have imposed upon us sales or other taxes related
to the products and services we sell in certain states and other
jurisdictions. Additional states or one or more countries or
other jurisdictions may seek to impose sales or other tax
collection obligations on us in the future. A successful
assertion by any country, state or other jurisdiction in which
we do business that we should be collecting sales or other taxes
on the sale of our products and services could, among other
things, create significant administrative burdens for us, result
in substantial tax liabilities for past sales, discourage
registered users from purchasing from us or otherwise
substantially harm our business and results of operations.

We
face risk associated with currency exchange rate
fluctuations.

For the six months ended June 30, 2009, approximately 20%
of our total revenues were received, and approximately 10% of
our total expenses were paid, in currencies other than the
United States dollar, such as the British pound sterling, the
Canadian dollar and the Australian dollar. As a result, we are
at risk for exchange rate fluctuations between such foreign
currencies and the United States dollar, which could affect our
results of operations. We attempt to limit our exposure by
paying our operating expenses incurred in foreign jurisdictions
with revenues received in the applicable currency, but if we do
not have enough local currency to pay all our expenses in that
currency, we are exposed to currency exchange rate risk with
respect to those expenses. We are also exposed to exchange rate
risk with respect to our profits earned in foreign currency.
Even if we were to implement hedging strategies to mitigate
foreign currency risk, these strategies might not eliminate our
exposure to foreign exchange rate fluctuations and would involve
costs and risks of their own, such as ongoing management time
and expertise, external costs to implement the strategies and
potential accounting implications.

If we acquire any businesses or technologies in the
future, they could prove difficult to integrate, disrupt our
business, dilute stockholder value or have an adverse effect on
our results of operations.

As part of our business strategy, we may engage in acquisitions
of businesses or technologies to augment our organic or internal
growth. While we have engaged in some acquisitions in the past,
we do not have extensive experience with integrating and
managing acquired businesses or assets. Acquisitions involve
challenges and risks in negotiation, execution, valuation and
integration. Moreover, we may not be able to find suitable
acquisition opportunities on terms that are acceptable to us.
Even if successfully negotiated, closed and integrated, certain
acquisitions may not advance our business strategy, may fall
short of expected
return-on-investment
targets or may fail. Any future acquisition could involve
numerous risks including:



potential disruption of our ongoing business and distraction of
management;



difficulty integrating the operations and products of the
acquired business;

dilution to our current stockholders from the issuance of equity
securities; and



potential loss of key employees or customers of the acquired
company.

In the event we enter into any acquisition agreements, closing
of the transactions could be delayed or prevented by regulatory
approval requirements, including antitrust review, or other
conditions. We may not be successful in addressing these risks
or any other problems encountered in connection with any
attempted acquisitions, and we could assume the economic risks
of such failed or unsuccessful acquisitions.

Our
business may be significantly impacted by a change in the
economy.

Our business may be affected by changes in the economy
generally. Our products and services are discretionary
purchases, and consumers may reduce their discretionary spending
on our products and services during an economic downturn such as
the present economic downturn. Although we have not yet
experienced a material increase in subscription cancellations or
a material reduction in subscription renewals, we may yet
experience such an increase or reduction in the future,
especially in the event of a prolonged recessionary period.
Conversely, consumers may spend more time using the Internet
during an economic downturn and may have less time for our
products and services in a period of economic growth. In
addition, media prices may increase in a period of economic
growth, which could significantly increase our marketing and
advertising expenses. As a result, our business, financial
condition and results operations may be significantly affected
by changes in the economy generally.

The loss of one or more of our key personnel, or our
failure to attract, assimilate and retain other highly qualified
personnel in the future, could harm our business.

We depend on the continued service and performance of our key
personnel, including Timothy Sullivan, our President and Chief
Executive Officer. We do not maintain key man insurance on any
of our officers or key employees. We also do not have long-term
employment agreements with any of our officers or key employees.
In addition, much of our key technology and systems are
custom-made for our business by our personnel. The loss of key
personnel, including key members of our management team, as well
as certain of our key marketing, sales, product development or
technology personnel, could disrupt our operations and have an
adverse effect on our ability to grow our business.

Several of our key personnel have only recently been employed by
us, and we are still in the process of assimilating and
integrating these personnel into our operations. Our failure to
successfully integrate these key employees into our business
could adversely affect our business.

In addition, to execute our growth plan, we must attract and
retain highly qualified personnel. Competition for these
employees is intense, and we may not be successful in attracting
and retaining qualified personnel. We have from time to time in
the past experienced, and we expect to continue to experience in
the future, difficulty in hiring and retaining highly skilled
employees with appropriate qualifications. Many of the companies
with which we compete for experienced personnel have greater
resources than we have. In addition, in making employment
decisions, particularly in the Internet and high-technology
industries, job candidates often consider the value of the stock
options they are to receive in connection with their employment.
Accounting principles generally accepted in the United States
relating to the expensing of stock options may discourage us
from granting the size or type of stock option awards that job
candidates may require to join our company. If we fail to
attract new personnel, or fail to retain and motivate our
current personnel, our business and future growth prospects
could be severely harmed.

We will be subject to additional regulatory compliance
matters, including Section 404 of the Sarbanes-Oxley Act of
2002, as a result of becoming a public company and our
management has limited experience managing a public
company.

We have never operated as a public company and will incur
significant legal, accounting and other expenses that we did not
incur as a private company. Our management team and other
personnel will need to devote a substantial amount of time to
new compliance initiatives and to meeting the obligations that
are associated with being a public company, and we may not
successfully or efficiently manage our transition into a public
company. We expect rules and regulations such as the
Sarbanes-Oxley Act of 2002 to increase our legal and finance
compliance costs and to make some activities more
time-consuming. We may need to hire a number of additional
employees with public accounting and disclosure experience in
order to meet our ongoing obligations as a public company. For
example, Section 404 of the Sarbanes-Oxley Act of 2002
requires that our management report on, and our independent
auditors to attest to, the effectiveness of our internal control
structure and procedures for financial reporting in our annual
report on
Form 10-K
for the fiscal year ending December 31, 2010.
Section 404 compliance may divert internal resources and
will take a significant amount of time and effort to complete.
We may not be able to successfully complete the procedures and
certification and attestation requirements of Section 404
by the time we will be required to do so. If we fail to do so,
or if in the future our chief executive officer, chief financial
officer or independent registered public accounting firm
determines that our internal controls over financial reporting
are not effective as defined under Section 404, we could be
subject to sanctions or investigations by the Nasdaq Stock
Market or the New York Stock Exchange, the Securities and
Exchange Commission, or SEC, or other regulatory authorities.
Furthermore, investor perceptions of our company may suffer, and
this could cause a decline in the market price of our stock.
Irrespective of compliance with Section 404, any failure of
our internal controls could have a material adverse effect on
our stated results of operations and harm our reputation. If we
are unable to implement these changes effectively or
efficiently, it could harm our operations, financial reporting
or financial results and could result in an adverse opinion on
internal controls from our independent auditors. Furthermore, we
are in the process of seeking additional independent directors
for our board of directors. If we are unable to identify and add
enough independent directors to our board to meet the listing
standards of the Nasdaq Stock Market or the New York Stock
Exchange by the deadlines set by the exchange, it could affect
our continued listing on the exchange.

Our reported financial results may be adversely affected
by changes in accounting principles applicable to us.

Generally accepted accounting principles in the United States
are subject to interpretation by the Financial Accounting
Standards Board, or FASB, the American Institute of Certified
Public Accountants, the Securities and Exchange Commission and
various bodies formed to promulgate and interpret appropriate
accounting principles. A change in these principles or
interpretations could have a significant effect on our reported
financial results, and could affect the reporting of
transactions completed before the announcement of a change. In
addition, the SEC has announced a multi-year plan that could
ultimately lead to the use of International Financial Reporting
Standards by United States issuers in their SEC filings. Any
such change could have a significant effect on our reported
financial results.

We
face risks from litigation.

From time to time, we may be subject to claims or litigation.
Any such claims or litigation may be time-consuming and costly,
divert management resources, require us to change our products
and services, require us to accept returns of software products,
or have other adverse effects on our business. Any of the
foregoing could have a material adverse effect on our results of
operations and could require us to pay significant monetary
damages. For example, we are currently in arbitration with a
content provider with respect to the timeliness and accuracy of
a content index we created and this claim could require us to
pay monetary damages or could result in litigation if the
arbitration is not successful. We currently believe that we do
not have any material exposure with respect to this claim;
however, litigation is subject to inherent uncertainties, and
there can be no assurance that an unfavorable ruling would not
have a material adverse impact on our results of operations,
cash flows and financial position.

If our intellectual property and technologies are not
adequately protected to prevent use or appropriation by our
competitors, the value of our brand and other intangible assets
may be diminished, and our business may be adversely
affected.

Our future success and competitive position depend in part on
our ability to protect our proprietary technologies and
intellectual property. We rely and expect to continue to rely on
a combination of confidentiality and license agreements with our
employees, consultants and third parties with whom we have
relationships, as well as trademark, copyright, patent and trade
secret protection laws, to protect our proprietary technologies
and intellectual property. In the United States, we currently
have three patents issued, and we have 20 patents pending
relating to digitization, indexing, storage, correlation, search
and display of content. Ancestry.com, myfamily.com,
Genealogy.com and Family Tree Maker are among our registered
trademarks. In addition, in the United States, we have filed
various trademark applications for certain aspects of our
technologies, and we have also filed trademark applications in
certain foreign countries for the Ancestry, and myfamily.com
names. However, we have also elected not to file applications
with respect to certain of our trademarks. Our decision is due
to a concern that these trademarks may not be protectable, even
if registered, because the names in question contain words or
terms having a common usage. We also possess intellectual
property rights in aspects of our digital content, search
technology, software products and digitization and indexing
processes. However, our digital content is not protected by any
registered copyrights or other registered intellectual property
or statutory rights. Rather, our digital content is protected by
user agreements that limit access to and use of our data, and by
our proprietary indexing and search technology that we apply to
make our digital content searchable. Compliance with use
restrictions is difficult to monitor, and our proprietary rights
in our digital content databases may be more difficult to
enforce than other forms of intellectual property rights.

There can be no assurance that the steps we take will be
adequate to protect our technologies and intellectual property,
that our patent and trademark applications will lead to issued
patents and registered trademarks, that others will not develop
or patent similar or superior technologies, products or
services, or that our patents, trademarks and other intellectual
property will not be challenged, invalidated or circumvented by
others. Furthermore, the intellectual property laws of other
countries at which our websites are or may be in the future be
directed may not protect our products and intellectual property
rights to the same extent as the laws of the United States. The
legal standards relating to the validity, enforceability and
scope of protection of intellectual property rights in
Internet-related industries are uncertain and still evolving,
both in the United States and in other countries. In addition,
third parties may knowingly or unknowingly infringe our patents,
trademarks and other intellectual property rights, and
litigation may be necessary to protect and enforce our
intellectual property rights. Any such litigation could be very
costly and could divert management attention and resources. If
the protection of our technologies and intellectual property is
inadequate to prevent use or appropriation by third parties, the
value of our brand and other intangible assets may be diminished
and competitors may be able to more effectively mimic our
subscription products and methods of operations. Any of these
events would have a material adverse effect on our business,
financial condition and results of operations.

We also expect that the more successful we are, the more likely
it will become that competitors will try to develop products
that are similar to ours, which may infringe on our proprietary
rights. It may also be more likely that competitors will claim
that our products infringe on their proprietary rights. If we
are unable to protect our proprietary rights or if third parties
independently develop or gain access to our or similar
technologies, our business, revenue, reputation and competitive
position could be harmed.

Confidentiality agreements with employees and others may
not adequately prevent disclosure of trade secrets and other
proprietary information.

A substantial amount of our tools and technologies are protected
by trade secret laws. In order to protect our proprietary
technologies and processes, we rely in part on security
measures, as well as confidentiality agreements with our
employees, licensees, independent contractors and other
advisors. These measures and agreements may not effectively
prevent disclosure of confidential information, including trade
secrets, and may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. We could
potentially lose

future trade secret protection if any unauthorized disclosure of
such information occurs. In addition, others may independently
discover our trade secrets and proprietary information, and in
such cases we could not assert any trade secret rights against
such parties. Laws regarding trade secret rights in certain
markets in which we operate may afford little or no protection
to our trade secrets. The loss of trade secret protection could
make it easier for third parties to compete with our products by
copying functionality. In addition, any changes in, or
unexpected interpretations of, the trade secret and other
intellectual property laws in any country in which we operate
may compromise our ability to enforce our trade secret and
intellectual property rights. Costly and time-consuming
litigation could be necessary to enforce and determine the scope
of our proprietary rights, and failure to obtain or maintain
trade secret protection could adversely affect our business,
revenue, reputation and competitive position.

Intellectual property claims against us could be costly
and result in the loss of significant rights related to, among
other things, our websites and marketing and advertising
activities.

Trademark, copyright, patent and other intellectual property
rights are important to us and other companies. Our intellectual
property rights extend to our technologies, business processes
and the content on our websites. We use intellectual property
licensed from third parties in merchandising our products and
marketing and advertising our services. From time to time, third
parties may allege that we have violated their intellectual
property rights. If there is a claim against us for
infringement, misappropriation, misuse or other violation of
third party intellectual property rights, and we are unable to
obtain sufficient rights or develop non-infringing intellectual
property or otherwise alter our business practices on a timely
basis, our business and competitive position may be adversely
affected. Many companies are devoting significant resources to
obtaining patents that could potentially affect many aspects of
our business. There are numerous patents that broadly claim
means and methods of conducting business on the Internet. We
have not exhaustively searched patents relevant to our
technologies and business. If we are forced to defend ourselves
against intellectual property infringement claims, whether they
are with or without merit or are determined in our favor, we may
face costly litigation, diversion of technical and management
personnel, limitations on our ability to use our current
websites or inability to market or provide our products or
services. As a result of any such dispute, we may have to
develop non-infringing technology, pay damages, enter into
royalty or licensing agreements, cease providing certain
products or services, adjust our merchandizing or marketing and
advertising activities or take other actions to resolve the
claims. These actions, if required, may be costly or unavailable
on terms acceptable to us. In addition, many of our co-branding,
distribution and other partnering agreements require us to
indemnify our partners for third-party intellectual property
infringement claims, which could increase the cost to us of an
adverse ruling in such an action.

In addition, as a publisher of online content, we face potential
liability for negligence, copyright, patent or trademark
infringement or other claims based on the nature and content of
data and materials that we publish or distribute. These claims
could potentially arise with respect to both company-acquired
content and user-generated content. Litigation to defend these
claims could be costly and any other liabilities we incur in
connection with the claims may harm our business, financial
condition and results of operations.

If we are unable to protect our domain names, our
reputation and brand could be affected adversely.

We have registered domain names for website destinations that we
use in our business, such as Ancestry.com, Genealogy.com and
myfamily.com. However, if we are unable to maintain our rights
in these domain names, our competitors could capitalize on our
brand recognition by using these domain names for their own
benefit. In addition, our competitors could capitalize on our
brand recognition by using domain names similar to ours. Domain
names similar to ours have been registered in the United States
and elsewhere, and in many countries the top-level domain names
ancestry or genealogy are owned by other
parties. Though we own the ancestry.co.uk domain
name in the United Kingdom, we might not be able to, or may
choose not to, acquire or maintain other country-specific
versions of the ancestry and genealogy
domain names. Further, the relationship between regulations
governing domain names and laws protecting trademarks and
similar proprietary rights varies from jurisdiction to
jurisdiction and is unclear in some jurisdictions. We may be
unable to prevent third parties from acquiring and using domain
names that infringe on, are similar to, or otherwise decrease
the value of, our brand or our trademarks or service marks.
Protecting and enforcing our rights in our domain names and
determining the rights of others may

require litigation, which could result in substantial costs and
divert management attention. We may not prevail if any such
litigation is initiated.

Risks
Related to this Offering and our Common Stock

An active, liquid and orderly trading market for our
common stock may not develop, our share price may be volatile
and you may be unable to sell your shares at or above the
offering price.

Prior to this offering, there has not been a public market for
our common stock. We cannot predict the extent to which a
trading market will develop or how liquid that market might
become. The initial public offering price for our shares will be
determined by negotiations between us and representatives of the
underwriters and may not be indicative of prices that will
prevail in the trading market. The market price of shares of our
common stock could be subject to wide fluctuations in response
to many risk factors listed in this section and others beyond
our control, including:

issuance of new or updated research or reports by securities
analysts;



our announcement of actual results for a fiscal period that are
higher or lower than projected or expected results or our
announcement of revenue or earnings guidance that is higher or
lower than expected;



fluctuations in the valuation of companies perceived by
investors to be comparable to us;

Furthermore, the stock markets have experienced extreme price
and volume fluctuations that have affected and continue to
affect the market prices of equity securities of many companies.
These fluctuations often have been unrelated or disproportionate
to the operating performance of those companies. These broad
market and industry fluctuations, as well as general economic,
political and market conditions such as recessions, interest
rate changes or international currency fluctuations, may cause
the market price of shares of our common stock to decline. If
the market price of shares of our common stock after this
offering does not exceed the initial public offering price, you
may not realize any return on your investment in us and may lose
some or all of your investment. In the past, companies that have
experienced volatility in the market price of their stock have
been subject to securities class action litigation. We may be
the target of this type of litigation in the future. Securities
litigation against us could result in substantial costs and
divert our managements attention from other business
concerns, which could seriously harm our business.

If securities or industry analysts do not publish research
or reports about our business, or if they change their
recommendations regarding our stock adversely, our stock price
and trading volume could decline.

The trading market for our common stock will be influenced by
the research and reports that industry or securities analysts
publish about us or our business. We do not currently have any
and may never obtain research coverage by industry or financial
analysts. If no or few analysts commence coverage of us, the
trading price of our stock would likely decrease. Even if we do
obtain analyst coverage, if one or more of the analysts who
cover us downgrade our stock, our stock price would likely
decline. If one or more of these analysts cease coverage of our
company or fail to regularly publish reports on us, we could
lose visibility in the financial markets, which in turn could
cause our stock price or trading volume to decline.

Substantial future sales of our common stock in the public
market could cause our stock price to fall.

Additional sales of our common stock in the public market after
this offering, or the perception that these sales could occur,
could cause the market price of our common stock to decline.
Upon completion of this offering, we will
have shares
of common stock outstanding. All shares sold in this offering
including any shares disposed of upon exercise of the
underwriters over-allotment option, will be freely
transferable without restriction or additional registration
under the Securities Act of 1933, as amended (the
Securities Act). The
remaining shares
of common stock outstanding after this offering will be
available for sale as follows:

Date of Availability for
Sale

Number of Shares

180 days after the date of this prospectus (subject to
extension upon the occurrence of specified events) due to the
release of the
lock-up
agreement these stockholders have with the underwriters

At some point after 180 days after the date of this
prospectus, subject to vesting requirements and the requirements
of Rule 144 (subject, in the case of affiliates, to volume
limitations) or Rule 701

In addition, the
approximately million
shares underlying options that are either subject to the terms
of our equity compensation plans or reserved for future issuance
under our equity compensation plans will become eligible for
sale in the public market to the extent permitted by the
provisions of various option agreements, the
lock-up
agreements and Rules 144 and 701 under the Securities Act.
At any time and without public notice, any or all of the shares
subject to the
lock-up may
be released prior to expiration of the
180-daylock-up
period at the discretion of Morgan Stanley & Co.
Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated. As resale restrictions end, the market price of
our common stock could decline if the holders of those shares
sell them or are perceived by the market as intending to sell
them. In addition, after this offering, the holders of
approximately shares
of common stock will be entitled to rights to cause us to
register the sale of those shares under the Securities Act. All
of these shares are subject to the
180-daylock-up
period. Registration of these shares under the Securities Act
would result in these shares becoming freely tradable without
restriction under the Securities Act immediately upon the
effectiveness of the registration.

Our
principal stockholder will likely control our company after this
offering.

As of June 30, 2009, Spectrum Equity Investors V, L.P.
and certain of its affiliated entities beneficially owned in the
aggregate shares representing approximately 67% of our
outstanding voting power. Two persons associated with Spectrum
Equity Investors V, L.P. currently serve on our board of
directors. After this offering, Spectrum Equity
Investors V, L.P. and certain of its affiliated entities
will beneficially own in the aggregate shares representing
approximately % of our outstanding
voting power, or approximately %,
if the underwriters exercise their over-allotment option in
full. As a result, Spectrum Equity Investors V, L.P. and
certain of its affiliates could control all matters presented to
our stockholders for approval, including election and removal of
our directors and change of control transactions. The interests
of Spectrum Equity Investors V, L.P. and certain of its
affiliated entities may not always coincide with the interests
of the other holders of our common stock.

As a
new investor, you will experience immediate and substantial
dilution.

Purchasers in this offering will immediately experience
substantial dilution in net tangible book value. Because our
common stock has in the past been sold at prices substantially
lower than the initial public offering price that you will pay,
you will suffer immediate dilution of
$ per share in net tangible book
value, based on an assumed initial offering price of
$ per share of common stock. The
exercise of outstanding options, 10,985,554 of which are
outstanding and exercisable as of June 30, 2009, may result
in further dilution.

Management may apply our net proceeds from this offering
to uses that do not increase our market value or improve our
operating results.

Depending on the size of the offering, we may be required to use
25% of the net proceeds we receive to repay a portion of the
amount outstanding under our credit facility. We intend to use
the remainder for general corporate purposes, including as yet
undetermined amounts related to working capital and capital
expenditures. Our

management will have considerable discretion in applying our net
proceeds and you will not have the opportunity, as part of your
investment decision, to assess whether we are using our net
proceeds appropriately. Until the net proceeds we receive are
used, they may be placed in investments that do not produce
income or that lose value. We may use our net proceeds for
purposes that do not result in any increase in our results of
operations, which could cause the price of our common stock to
decline.

Delaware law and our corporate charter and bylaws will
contain anti-takeover provisions that could delay or discourage
takeover attempts that stockholders may consider
favorable.

Provisions in our certificate of incorporation and bylaws, that
we intend to adopt before the completion of this offering, may
have the effect of delaying or preventing a change of control or
changes in our management. For example, our board of directors
will have the authority to issue up
to shares
of preferred stock in one or more series and to fix the powers,
preferences and rights of each series without stockholder
approval. The ability to issue preferred stock could discourage
unsolicited acquisition proposals or make it more difficult for
a third party to gain control of our company, or otherwise could
adversely affect the market price of our common stock. Our
amended and restated certificate of incorporation will require
that any action to be taken by stockholders must be taken at a
duly called meeting of stockholders, which may only be called by
our board of directors, the chairperson of our board of
directors or the chief executive officer with the concurrence of
a majority of our board of directors, and may not be taken by
written consent. Our amended and restated bylaws will require
that any stockholder proposals or nominations for election to
our board of directors must meet specific advance notice
requirements and procedures, which make it more difficult for
our stockholders to make proposals or director nominations. In
addition, we will have a classified board of directors with
three-year staggered terms, which could delay the ability of
stockholders to change membership of a majority of our board of
directors. For additional information, please see
Description of Capital Stock.

Furthermore, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware
General Corporation Law. These provisions may prohibit or
restrict large stockholders, in particular those owning 15% or
more of our outstanding voting stock, from merging or combining
with us. These provisions in our certificate of incorporation
and bylaws and under Delaware law could discourage potential
takeover attempts and could reduce the price that investors
might be willing to pay for shares of our common stock in the
future and result in our market price being lower than it would
without these provisions.

We do not currently intend to pay dividends on our common
stock and, consequently, your ability to achieve a return on
your investment will depend on appreciation in the price of our
common stock.

We have never declared or paid any cash dividends on our common
stock and do not intend to do so for the foreseeable future. We
currently intend to invest our future earnings, if any, to fund
our growth. In addition, the provisions of our credit facility
prohibit us from paying cash dividends. Therefore, you are not
likely to receive any dividends on your common stock for the
foreseeable future and the success of an investment in shares of
our common stock will depend upon any future appreciation in
their value. There is no guarantee that shares of our common
stock will appreciate in value or even maintain the price at
which our stockholders have purchased their shares.

This prospectus, including the sections entitled
Prospectus Summary, Risk Factors,
Managements Discussion and Analysis of Financial
Condition and Results of Operations and
Business, contains forward-looking statements. We
may, in some cases, use words such as project,
believe, anticipate, plan,
expect, estimate, intend,
should, would, could,
potentially, will or may, or
other words that convey uncertainty of future events or outcomes
to identify these forward-looking statements. Forward-looking
statements in this prospectus include statements about:

our ability to generate additional revenues on a cost-effective
basis;



our ability to acquire content and make it available online;



the success of our promotional programs and new products;



disruptions in our services;



our international expansion plans;



success with respect to any future acquisitions;



our ability to retain and hire necessary employees;



our ability to adequately protect our intellectual property;



our liquidity and working capital requirements; and



the effect of laws applying to our business.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, level of activity, performance or achievements.
There are a number of important factors that could cause actual
results to differ materially from the results anticipated by
these forward-looking statements, which statements apply only as
of the date of this prospectus. These important factors include
those that we discuss in this prospectus under the caption
Risk Factors and elsewhere. You should read these
factors and the other cautionary statements made in this
prospectus as being applicable to all related forward-looking
statements wherever they appear in this prospectus. If one or
more of these factors materialize, or if any underlying
assumptions prove incorrect, our actual results, performance or
achievements may vary materially from any future results,
performance or achievements expressed or implied by these
forward-looking statements. We undertake no obligation to
publicly update any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.

We estimate that the net proceeds we receive from this offering
will be approximately
$ million based on the
assumed initial public offering price of
$ per share, which is the midpoint
of the range included on the cover page of this prospectus after
deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us. If the
underwriters option to purchase additional shares in this
offering is exercised, our estimated net proceeds will be
approximately $ million after
deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us. We will not
receive any proceeds from the sale of shares of our common stock
by the selling stockholders. A $1.00 increase or decrease in the
assumed initial public offering price of
$ per share would increase or
decrease the net proceeds we receive from this offering by
approximately $ million,
assuming the number of shares offered by us as set forth on the
cover page of this prospectus remains the same and after
deducting the estimated underwriter discounts and commissions
and estimated offering expenses payable by us.

Depending on the size of this offering, we may be required to
use 25% of the net proceeds we receive to repay a portion of the
amount outstanding under our credit and guarantee agreement with
CIT Lending Services Corporation, as Administrative Agent, and
certain other financial institutions. This credit facility has a
maturity date of December 5, 2012 and had an outstanding
balance of approximately $117.1 million and an interest
rate of approximately 4.1% as of June 30, 2009.

We expect to use the remainder of the net proceeds for working
capital and general corporate purposes. We may also use a
portion of the proceeds to expand our current business through
acquisitions or investments in other strategic businesses,
products or technologies. We have no commitments with respect to
any acquisitions at this time. We will have broad discretion in
the way we use the net proceeds.

We intend to invest the net proceeds in short- and
intermediate-term interest-bearing obligations, investment-grade
instruments, certificates of deposit or guaranteed obligations
of the United States government, pending their use as described
above.

The primary purposes of this offering are to raise additional
capital, create a public market for our common stock, allow us
easier and quicker access to the public markets should we need
more capital in the future, increase the profile and prestige of
our company with existing and possible future registered users,
vendors and strategic partners, and make our stock more valuable
and attractive to our employees and potential employees for
compensation purposes.

We have never declared or paid any cash dividends on our capital
stock. Our credit facility prohibits us from paying cash
dividends. We currently expect to retain future earnings to
finance the growth and development of our business and do not
anticipate paying any cash dividends in the foreseeable future.
Any determination to pay dividends in the future will be at the
discretion of our board of directors and will be dependent on
then-existing conditions.

The following table sets forth our cash and cash equivalents,
our current portion of long-term debt and capitalization at
June 30, 2009 on:



an actual basis; and



an as adjusted basis to give effect to (i) the
1-for- reverse
split of our common stock to be effective immediately prior to
this offering and the filing of a Second Amended and Restated
Certificate of Incorporation, (ii) the sale by us
of shares
of common stock in this offering and our receipt of the
estimated net proceeds from that sale after deducting estimated
underwriting discounts and commissions and estimated offering
expenses payable by us and (iii) our use of a portion of
the net proceeds to repay $
outstanding under our credit agreement.

You should read this table in conjunction with the financial
statements and notes to the consolidated financial statements
included elsewhere in this prospectus.

June 30, 2009

Actual

As adjusted

(in thousands)

(unaudited)

Cash and cash equivalents

$

52,613

$

Current portion of long-term debt

$

11,226

$

Long-term debt

$

105,848

$

Common stock, $0.001 par value; 100,000,000
and shares
authorized, 76,652,684
and issued
and outstanding, actual and as adjusted

Each $1.00 increase or decrease in the assumed initial public
offering price of $ per share, the
midpoint of the range set forth on the cover page of this
prospectus, would increase or decrease the amount of cash and
cash equivalents, additional paid-in capital, total
stockholders equity and total capitalization by
approximately $ million, and
may decrease long-term debt by approximately
$ million, assuming the
number of shares offered by us as set forth on the cover page of
this prospectus remains the same and after deducting the
estimated underwriting discounts and commissions and estimated
expenses payable by us.

If you invest in our common stock, you will be diluted to the
extent the initial public offering price per share of our common
stock exceeds the net tangible book value per share of our
common stock immediately after this offering. Our net tangible
book value as of June 30, 2009 was a deficit of
approximately $(151.2) million, or $(1.97) per share of
common stock. The net tangible book value per share represents
the amount of our tangible net worth, or total tangible assets
less total liabilities, divided by 76,652,684 shares of our
common stock outstanding as of that date.

After giving effect to the issuance and sale
of shares
of our common stock sold by us in this offering and our receipt
of the estimated net proceeds from such sale, based on an
assumed public offering price of $
per share (the midpoint of the range set forth on the cover page
of this prospectus), and after deducting the estimated
underwriting discount and commission and the estimated expenses
of the offering, our as adjusted net tangible book value per
share as of June 30, 2009 would have been approximately
$ per share. This amount
represents an immediate increase in net tangible book value of
$ per share to existing
stockholders and an immediate dilution in net tangible book
value of $ per share to new
investors purchasing shares of our common stock in this
offering. Dilution per share is determined by subtracting the
net tangible book value per share as adjusted for this offering
from the amount of cash paid by a new investor for a share of
our common stock. Net tangible book value is not affected by the
sale of shares of our common stock offered by the selling
stockholders. The following table illustrates the per share
dilution:

Assumed initial public offering price per share

$

Net tangible book value per share as of June 30, 2009

$

(1.97

)

Increase in net tangible book value per share attributable to
new investors

$

Adjusted net tangible book value per share after this offering

$

Dilution per share to new investors

$

A $1.00 increase (decrease) in the assumed initial public
offering price of $ per share
would increase (decrease) our net tangible book value by
$ , the net tangible book value per
share after this offering by $ and
the dilution per share to new investors by
$ , assuming the number of shares
offered by us, as set forth on the cover page of this
prospectus, remains the same, and after deducting the estimated
underwriting discounts and commissions and estimated offering
expenses payable by us.

The following table summarizes as of June 30, 2009, after
giving effect to the offering:



the total number of shares of common stock purchased from us;



the total consideration paid to us before deducting estimated
underwriting discounts and commissions of
$ and estimated offering expenses
of approximately $ ; and



the average price per share paid by existing stockholders and by
new investors who purchase shares of common stock in this
offering at the assumed initial public offering price of
$ per share.

Average

Shares Purchased

Total Consideration

Price per

Number

Percent

Amount

Percent

Share

Existing stockholders

%

$

%

$

New investors

Total

100

%

100

%

The foregoing table does not reflect proceeds to be realized by
existing stockholders in connection with the sales by them in
this offering, options outstanding under our stock option plans
or stock options to be granted after the offering. Following the
offering, there will
be
options outstanding with an average exercise price of
$ .

The tables on the following pages set forth the consolidated
financial and operating data as of and for the periods
indicated. The consolidated statements of operations data
presented below for the years ended December 31, 2004 and
2005 and the balance sheet data as of December 31, 2004,
2005 and 2006 have been derived from our consolidated financial
statements, which have been audited by Ernst & Young
LLP, an independent registered public accounting firm, and which
are not included in this prospectus. The consolidated statements
of operations data presented below for the year ended
December 31, 2006, the predecessor period from
January 1, 2007 through December 5, 2007, the
successor period from December 6, 2007 through
December 31, 2007 and the year ended December 31,
2008, and the balance sheet data as of December 31, 2007
and 2008 have been derived from our consolidated financial
statements, which have been audited by Ernst & Young
LLP and which are included in this prospectus. The consolidated
statements of operations data for the six month periods ended
June 30, 2008 and 2009 and the balance sheet data at
June 30, 2009 are derived from our unaudited interim
consolidated financial statements and include all adjustments,
consisting of normal and recurring adjustments that we consider
necessary for a fair presentation of the financial position and
results of operations as of and for such periods. Operating
results for the six months ended June 30, 2009 are not
necessarily indicative of the results that may be expected for
the full 2009 fiscal year. See Risk Factors and the
notes to our consolidated financial statements. You should read
the consolidated financial data presented on the following pages
in conjunction with our consolidated financial statements, the
notes to our consolidated financial statements and
Managements Discussion and Analysis of Financial
Condition and Results of Operations.

In connection with the Spectrum
investment, we were recapitalized. As a result, the capital
structure of our predecessor is not comparable to that of the
successor. Accordingly, net income per common share is not
comparable or meaningful for periods prior to 2008 and has not
been presented.

The terms total subscribers,
monthly churn, subscriber acquisition cost and average monthly
revenue per subscriber are defined in the
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Key Business
Metrics section. The monthly churn is the average monthly
churn for the quarters included in the periods shown.

(2)

Subscriber additions, subscriber
acquisition cost and monthly churn are not comparable for
certain periods due to a change in the packaging of our products
and services, and accordingly, have not been presented.

(3)

Average monthly revenue per
subscriber is not comparable for certain periods because
Ancestry.com revenues are not available on a comparable basis
for certain periods, and accordingly, has not been presented.

The following table presents a reconciliation of adjusted EBITDA
and free cash flow to net income (loss), the most comparable
GAAP measure, for each of the periods identified. For additional
information, please see the discussion of adjusted EBITDA and
free cash flow in Prospectus Summary.

Predecessor

Successor

Period from

Period from

Year

Jan. 1, 2007

Dec. 6, 2007

Ended

Year Ended Dec. 31,

through

through

Dec. 31,

Six Months Ended June 30,

2004

2005

2006

Dec. 5, 2007

Dec. 31, 2007

2008

2008

2009

(in thousands)

Reconciliation of adjusted EBITDA and free cash flow to net
income (loss):

Net income (loss)

$

4,933

$

8,144

$

8,149

$

7,771

$

(1,303

)

$

2,384

$

1,239

$

8,183

Interest (income) expense, net

1,021

211

(1,292

)

(1,295

)

857

11,483

5,773

2,658

Income tax expense

2,928

5,086

4,595

5,018

103

1,845

1,399

4,442

Depreciation expense

5,147

7,598

9,559

10,594

754

10,732

5,420

5,330

Amortization expense

4,384

4,767

6,489

7,094

1,974

30,046

14,936

11,541

Stock-based compensation

3,213

(1,344

)

3,789

898

77

4,672

2,408

2,803

Other (income) expense, net

(640

)

(1,259

)

(834

)

(266

)

(7

)

8

(1

)

(10

)

Impairment of intangible assets and acquired in-process research
and development

You should read the following discussion together with our
consolidated financial statements and the related notes included
elsewhere in this prospectus. This discussion contains
forward-looking statements about our business and operations.
Our actual results may differ materially from those we currently
anticipate as a result of many factors, including those we
describe under Risk Factors and elsewhere in this
prospectus. See Special Note Regarding Forward Looking
Statements.

Company
Overview

Ancestry.com is the worlds largest online resource for
family history, with almost one million paying subscribers
around the world as of June 30, 2009. Our mission is to
help everyone discover, preserve and share their family history.
Our subscribers use our proprietary online platform, extensive
digital historical record collection, and easy-to-use technology
to research their family histories, build their family trees,
collaborate with other subscribers, upload their own records and
publish and share their stories with their families. We offer
our service on a subscription basis, typically annual or
monthly. These subscribers are our primary source of revenue. We
charge each subscriber the full price for their subscription at
the commencement of their subscription period and at each
renewal date. The predominantly annual commitments of our
subscribers enhance managements near-term visibility on
our revenues and provide working capital benefits, which we
believe enable us to more effectively manage the growth of our
business.

We operated as The Generations Network, Inc., which we refer to
as the predecessor, until December 5, 2007. On
December 5, 2007, Generations Holding, Inc., which we refer
to as the successor, acquired The Generations Network, Inc. in
connection with an investment by Spectrum Equity
Investors V, L.P. and certain of its affiliated entities.
The successor was created for the sole purpose of acquiring The
Generations Network, Inc. and had no prior operations. As a
result of that transaction, which we refer to as the Spectrum
investment, Spectrum and certain of its affiliated entities
currently hold approximately 67% of the outstanding shares of
our common stock. As a result of the accounting for the Spectrum
investment, our fiscal year 2007 is divided into a predecessor
period from January 1, 2007 to December 5, 2007 and a
successor period from December 6, 2007 until
December 31, 2007. In some presentations of fiscal 2007, to
facilitate a comparison of our annual results we have combined
these periods solely to enhance the readers understanding
of the results of operations for the period presented and to
provide the reader a more meaningful comparison of our annual
periods.

We have funded our operations primarily from cash flows from
operations during the last five years. Our revenues increased
from $122.6 million in 2004 to $197.6 million in 2008.
Our revenues were $95.1 million in the first half of 2008,
as compared to $107.8 million for the first half of 2009.
The number of subscribers on the Ancestry.com websites has
increased from approximately 460,000 in January 2004 to almost
one million as of June 30, 2009. Our average monthly
revenue per subscriber was $16.09 in 2008.

We believe our previous investments in technology and content
have provided us a foundation for a scalable business model that
will help us to increase our margins over the long term and
effectively manage our costs as our business grows. However, we
expect to continue to devote substantial resources and funds to
improving our technologies and product offerings and acquiring
new and relevant content, and also to expanding awareness of our
brand and category through marketing, which may reduce our
margins in the near term.

Key
Business Metrics

Our management regularly reviews a number of financial and
operating metrics, including the following key operating metrics
to evaluate our business, determine the allocation of resources,
make decisions regarding corporate strategies and evaluate
forward-looking projections. The following key operating metrics
reflect data with respect to the Ancestry.com websites and
exclude our other subscription-based websites, such as
myfamily.com and Geneology.com.



Total subscribers. A subscriber is an
individual who pays for renewable access to one of our
Ancestry.com websites. Total subscribers is defined as the
number of subscribers at the end of the relevant period.

Monthly churn. Monthly churn is a measure
representing the number of subscribers that cancel in the
quarter divided by the sum of beginning subscribers and
subscriber additions during the quarter. To arrive at monthly
churn, we divide the result by three. Management uses this
measure to determine the health of our subscriber base.



Average monthly revenue per
subscriber. Average monthly revenue per
subscriber is total subscription revenues earned in the period
from subscriptions to one of the Ancestry.com websites divided
by the average number of subscribers in the period, divided by
the number of months in the period. The average number of
subscribers for the period is calculated by taking the average
of the beginning and ending number of subscribers for the period.



Subscriber acquisition cost. Subscriber
acquisition cost is external marketing and advertising expense,
divided by total subscriber additions in the period. Management
uses this metric to determine the efficiency of our marketing
and advertising programs in acquiring new subscribers.

A significant number of our renewals occur in the first quarter
of each year. Because we recognize subscription revenues ratably
over the subscription period, this trend generally has not
resulted in a material seasonal impact on our revenues, but may
result in a seasonal effect on one or more of the key business
metrics described above.

The following represents our performance highlights for the year
ended December 31, 2006, the combined period ended
December 31, 2007, the year ended December 31, 2008
and the six month periods ended June 30, 2008 and 2009:

Year Ended December 31,

Combined

Six Months Ended June 30,

2006

2007

2008

2008

2009

Total subscribers

734,386

832,193

913,683

861,235

990,959

Subscriber additions

569,851

479,663

556,045

272,790

348,955

Monthly
churn(1)

3.5

%

4.0

%

4.2

%

4.1

%

Subscriber acquisition cost

$

49.29

$

70.96

$

71.99

$

71.11

$

67.30

Average monthly revenue per subscriber

$

14.52

$

14.83

$

16.09

$

15.93

$

16.50

(1)

Monthly churn is the average
monthly churn for the quarters included in the periods shown.
Monthly churn is not comparable for the year ended
December 31, 2006 due to a change in the packaging of our
products and services, and accordingly, has not been presented.

Components
of Consolidated Statements of Operations

Revenues

Subscription revenues. We derive subscription
revenues primarily from providing access to our products and
services via our various Ancestry.com websites. Subscription
revenues are recognized ratably over the subscription period
which consists primarily of monthly and annual subscriptions,
net of estimated cancellations. We typically charge each
subscribers credit card for the full price for their
subscription at the commencement of their subscription period
and at each renewal date (whether annual or monthly), unless
they cancel their subscription before the renewal date. The
amount of unrecognized revenues is recorded in deferred revenue.
We generally record cancellations and returns as a reduction to
deferred revenues. When people sign up for trial subscriptions,
we automatically charge their credit card for a subscription at
the end of the trial period unless they cancel before the end of
the trial period. Subscription revenues from our Ancestry.com
websites accounted for 94% of the total subscription revenues
for the year ended December 31, 2008. Subscription revenues
also include annual subscriptions to our myfamily.com website
and other subscription-based products and services.

A majority of our subscription revenues are derived from
subscribers in the United States. We attribute subscription
revenues by country based on the billing address of the
subscriber, regardless of which of our websites the person
subscribes. Revenues from subscribers in the United States, the
United Kingdom and other countries collectively were 82%, 14%
and 4%, respectively, in 2006 compared to 75%, 19% and 6%,
respectively, in 2007 and

74%, 18% and 8% of our subscription revenues, respectively, in
2008. Revenues from subscribers in the United States, the United
Kingdom and other countries collectively were 74%, 19% and 7%,
respectively, in the first half of 2008 compared to 76%, 16% and
8%, respectively, in the first half of 2009.

Product and other revenues. Product and other
revenues consist of sales of desktop software (Family Tree
Maker), DNA testing (Ancestry.com | DNA), books,
periodicals, certificates, our self-publishing products
(MyCanvas.com), advertising services and access to our family
history content on a
pay-per-view
basis, which is available on our United Kingdom and certain
other internationally directed websites. Revenues related to
these products are recognized upon shipment, delivery of genetic
results, shipment of magazine or delivery of online ad
impressions or granting of
pay-per-view
access, as applicable.

Cost
of Revenues

Cost of subscription revenues. Cost of
subscription revenues consist of amortization of our database
content costs, depreciation expense on web servers and
equipment, credit card processing fees, web hosting costs,
royalty costs on certain content licensed from others,
personnel-related costs for database content support and call
center personnel. Since January 1, 2007, our call center
has primarily functioned as a subscriber service organization. A
majority of the costs associated with our call center since
January 1, 2007 have been recorded in cost of subscription
revenues. We expect database content amortization and web
hosting costs to continue to increase in 2009 as we continue to
add database content and develop a redundant hosting location.

Cost of product and other revenues. Cost of
product and other revenues consist of our direct costs to
purchase the products, shipping costs, credit card processing
fees, personnel-related costs of warehouse personnel, warehouse
storage costs and royalties on products licensed from others.

Gross profit. Gross profit is the result of
total revenues minus our total cost of revenues.

Personnel-related costs for each category of cost of revenues
and operating expenses include salaries, bonuses, stock-based
compensation and employee benefit costs.

Operating
Expenses

Technology and development. Technology and
development expenses consist of personnel-related costs incurred
in product development, maintenance and testing of our websites,
enhancing our record search and linking technologies, developing
solutions for new product lines, internal information systems
and infrastructure, third-party development, and other
internal-use software systems. Technology and development
expenses also include depreciation of computer hardware and
purchased software. Our development costs are primarily based in
the United States and are primarily devoted to providing content
and tools for individuals to do family history research. We
expect our investment in technology and development to increase
in absolute dollars in future periods.

Marketing and advertising. Marketing and
advertising expenses consist primarily of direct expenses
related to online, television and print advertising, retention
marketing expenses, payments made to affiliates to generate new
subscribers and personnel-related expenses. Prior to
January 1, 2007, our call center was principally a sales
organization. The majority of the costs associated with the call
center prior to January 1, 2007 were recorded in marketing
and advertising. Marketing and advertising costs are principally
incurred in the United States, but we do have marketing and
advertising offices in Europe, Australia and Canada. We expect
marketing expenses to increase in absolute dollars but to remain
relatively stable in the near future as a percentage of
revenues, except for an increase in marketing expenses primarily
in 2010 related to a one time payment we expect to make for
product integration on the U.S. version of the television
show Who Do You Think You Are? We do not control the
release of this television show and cannot be sure if or when it
will be released or if it will have any effect on our revenues
or results of operations. If our revenues increase as a result
of interest in Ancestry.com attributable to the airing of this
program, such increase may not be sustainable over time.

General and administrative. General and
administrative expenses consist principally of personnel-related
expenses for our executive, finance, legal, human resources and
other administrative personnel, as well as accounting and legal
professional fees and other general corporate expenses. We
expect our general and administrative expenses to increase when
we become a public company as we expect our accounting, legal
and personnel-

related expenses and directors and officers insurance costs to
increase as we institute and monitor a more comprehensive
compliance and board governance function, maintain and review
internal control over financial reporting in accordance with
Section 404 of the Sarbanes-Oxley Act and prepare and
distribute periodic reports.

Amortization of acquired intangible
assets. Amortization of acquired intangible
assets is the amortization expense associated with subscriber
relationships and contracts, core technologies, and intangible
assets, including trademarks and tradenames, resulting from the
Spectrum investment.

Interest expense on debt. Interest expense on
debt includes the interest expense associated with our long-term
debt and amortization of debt-issuance costs.

Interest income. Interest income includes
interest earned on cash and cash equivalents and short-term
investments.

Income tax expense. Income tax expense
consists of federal and state income taxes in the United States
and taxes in certain foreign jurisdictions.

Critical
Accounting Estimates

Our consolidated financial statements are prepared in accordance
with United States generally accepted accounting principles, or
GAAP. The preparation of these consolidated financial statements
requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, costs and
expenses, and related disclosures. These estimates and
assumptions are often based on judgments that we believe to be
reasonable under the circumstances at the time made, but all
such estimates and assumptions are inherently uncertain and
unpredictable. Actual results may differ from those estimates
and assumptions, and it is possible that other professionals,
applying their own judgment to the same facts and circumstances,
could develop and support alternative estimates and assumptions
that would result in material changes to our operating results
and financial condition. We evaluate our estimates and
assumptions on an ongoing basis. Our estimates are based on
historical experience and various other assumptions that we
believe to be reasonable under the circumstances.

We consider the assumptions and estimates associated with
recoverability of intangible assets, the period of amortization
of our database content costs, stock-based compensation and
income taxes to be our critical accounting estimates. For
further information on our significant accounting policies, see
Note 1 of the accompanying notes to our consolidated
financial statements.

Recoverability of intangible assets, including
goodwill. Intangible assets consist of
acquisition costs related to database costs, subscriber
relationships and contracts, technologies, trade names and
trademarks, and other intangible assets. Intangible assets
acquired in a business combination are measured at fair value at
the date of acquisition. We amortize all intangible assets,
except for acquired subscriber relationships, on a straight line
basis over their expected lives in accordance with Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill
and Other Intangible Assets (SFAS 142). Acquired
subscriber relationships were amortized on a straight-line basis
prior to the acquisition of our predecessor and, subsequent to
the acquisition, are amortized based on the rate of decline of
subscribers used to calculate the fair value of the intangible
asset in the acquisition and purchase price allocation. As of
December 31, 2007 and 2008, respectively, we had
approximately $285.0 million and approximately
$285.5 million of goodwill and approximately $127.5 and
approximately $104.9 million of intangible assets with
estimable useful lives on our consolidated balance sheets.

We review our indefinite-lived intangible assets for impairment
at least annually or as indicators of impairments exist based on
the fair value of indefinite-lived intangible assets compared to
the carrying value in accordance with SFAS 142. In the
event such cash flows are not expected to be sufficient to
recover the recorded value of the assets, we write down the
assets to their net realizable values. Our analysis considers
estimated revenue and expense growth rates. These estimates are
based on historical experience and projected future activity,
including new

product growth. Based on our analysis, we believe that no
impairment of our indefinite lived intangible assets was
indicated as of December 31, 2007 and 2008.

In accordance with SFAS 142, goodwill is not amortized and
is tested for impairment annually and whenever events and
circumstances occur indicating goodwill might be impaired. We
test impairment in the fourth quarter of each year and for the
years ended December 31, 2006, 2007 and 2008, we determined
that no impairment of goodwill had occurred during any of the
periods presented. The valuation of goodwill could be affected
if actual results differ substantially from our estimates.
Circumstances that could affect the valuation of goodwill
include a significant change in our business climate and buying
habits of our subscriber base along with increased costs to
provide the systems and technologies required to support our
content and search capabilities.

We evaluate the recoverability of our long-lived assets in
accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-lived Assets. SFAS 144
requires recognition of impairment of long-lived assets in the
event that the net book value of such assets exceeds the future
undiscounted net cash flows attributable to such assets. In
accordance with SFAS 144, we recognize impairment, if any,
in the period of identification to the extent the carrying
amount of an asset exceeds the fair value of such asset. Based
on our analysis, we recorded an impairment of approximately
$1.5 million for the year ended December 31, 2008
related to a database content set we were developing for release
in China. The impairment was expensed to cost of subscription
revenues for the year ended December 31, 2008. No
impairment was indicated as of December 31, 2007.

Period of amortization of our database
costs. Our database consists of historical
information that has been digitized and indexed to allow
subscribers to search and view our content online. Database
costs include the costs to acquire or license the historical
data, costs incurred by our employees or by third parties to
scan the content, and costs to have the content keyed and
indexed in order to be searchable. Among the most utilized
content in our databases is the United States and United Kingdom
census records which are released by government entities every
ten years. We amortize our database costs on a straight-line
basis over ten years after the content is released for viewing
on our websites.

Stock-based compensation. We account for
stock-based compensation in accordance with SFAS
No. 123(R), Share-Based Payment (SFAS 123(R)).
Under the provisions of SFAS 123(R), stock-based
compensation cost for each award is estimated at the grant date
based on the awards fair value as calculated by the
Black-Scholes option-pricing model and is recognized as expense
over the requisite service period. The Black-Scholes model
requires various highly judgmental assumptions including fair
value of the underlying stock, volatility and expected option
life. If any of the assumptions used in the Black-Scholes model
change significantly, stock-based compensation expense is
adjusted accordingly and stock-based compensation expense may
differ materially in the future from that recorded in the
current period.

We adopted SFAS 123(R) prospectively as of January 1,
2006 and therefore have applied the valuation provisions of
SFAS 123(R) to all new options and to options that were
outstanding prior to the effective date that were subsequently
modified. For the year ended December 31, 2006, we had
variable stock options which accounted for a de minimus amount
of compensation expense. No other periods were affected by
variable stock options. We also recorded non-cash compensation
expense for the repurchase of common stock within six months of
the exercise of employee stock options of approximately
$3.0 million for the year ended December 31, 2006.

In January 2006, we modified the terms of then-outstanding stock
options with exercise prices above $2.30, reducing the exercise
price of the options to $2.30. As a result of the modification
we recorded incremental compensation expense of
$0.4 million and $0.1 million for the year ended
December 31, 2006 and the period from January 1, 2007
through December 5, 2007, respectively, and a de minimus
amount for the period from December 6, 2007 through
December 31, 2007 and for the year ended December 31,
2008.

As of December 31, 2007 and 2008 and June 30, 2009
there was approximately $2.1 million, $8.6 million and
$10.4 million, respectively, of unrecognized stock-based
compensation expense related to non-vested stock option awards
that we expect to be recognized over a weighted average period
of 3.1, 2.6 and 2.7 years, respectively.

The following tables set forth the total non-cash compensation
expense included in the related financial statement line items,
which total non-cash compensation expense includes
SFAS 123(R) stock-based compensation

expense, variable stock options expense and compensation expense
associated with the repurchase of common stock described above:

Predecessor

Successor

Successor

Period from

Period from

Combined

January 1,

December 6,

Period

Year Ended

through

through

Ended

Year Ended

Six Months

December 31,

December 5,

December 31,

December 31,

December 31,

Ended June 30,

2006

2007

2007

2007

2008

2008

2009

(in thousands)

(unaudited)

Cost of subscription
revenues

$

31

$

73

$

3

$

76

$

80

$

40

$

61

Technology and development

224

260

23

283

1,132

504

835

Marketing and advertising

196

279

27

306

254

106

169

General and administrative

3,338

286

24

310

3,206

1,758

1,738

Total

$

3,789

$

898

$

77

$

975

$

4,672

$

2,408

$

2,803

We estimated the fair value of each option granted using the
Black-Scholes option-pricing method using the following
assumptions:

Combined Period

Year Ended

Ended

Year Ended

Six Months

December 31,

December 31,

December 31,

Ended June 30,

2006

2007

2008

2008

2009

(unaudited)

Expected stock price volatility

65

%

65

%

50

%

50

%

50

%

Expected life of options

4 years

4 years

4 years

4 years

4.3 years

Expected dividend yield

0

0

0

0

0

Risk-free interest rate

4.6-5.0

%

4.6-4.9

%

1.4-3.1

%

2.2-2.8

%

1.5-3.7

%

As of each stock option grant date, we considered the fair value
of the underlying common stock, determined as described below,
in order to establish the option exercise price. As of each
stock option grant date, we reviewed an average of the disclosed
year-end volatility of a group of companies that we considered
peers based on a number of factors including, but not limited
to, similarity to us with respect to industry, business model,
stage of growth, financial risk or other factors, along with
considering the future plans of our company to determine the
appropriate volatility. The expected life was based on our
historical stock option activity. The risk-free interest rate
was determined by reference to the United States Treasury rates
with the remaining term approximating the expected life assumed
at the date of grant. In addition, we are required to estimate
the expected forfeiture rate and only recognize expense for
those options expected to vest. We estimate the forfeiture rate
based on our historical experience. Further, to the extent our
actual forfeiture rate is different from our estimate,
stock-based compensation expense is adjusted accordingly.

The following table sets forth all stock option grants since
January 1, 2006 through the date of this prospectus:

Common Stock

Number of

Fair Value per

Intrinsic

Grant Date

Options Granted

Exercise Price

Share at Grant Date

Value

February 14, 2006

295,000

$

2.30

$

2.30

$



March 30, 2006

560,000

2.30

2.30



May 25, 2006

430,500

2.30

2.30



July 27, 2006

670,000

2.30

2.30



September 21, 2006

273,000

2.30

2.30



November 17, 2006

195,000

2.30

2.30



January 31, 2007

183,500

2.35

2.35



May 1, 2007

360,000

2.35

2.35



July 19, 2007

162,000

2.35

2.35



March 27, 2008

6,978,241

2.70

2.70



April 29, 2008

172,500

2.70

2.70



July 30, 2008

481,500

2.70

2.70



November 3, 2008

723,000

2.75

2.75



December 5, 2008

21,000

2.75

2.75



February 11, 2009

1,136,000

2.75

2.75



March 13, 2009

424,335

2.75

3.68

0.93

May 27, 2009

1,292,000

3.68

3.68



July 20, 2009

724,000

4.27

4.27



These estimates of the fair value of our common stock were made
based on information from the following valuation dates:

Fair Value

Valuation Date

per Share

November 11, 2005

$

2.30

December 31, 2006

2.35

October 27, 2008

2.75

March 31, 2009

3.68

June 30, 2009

4.27

Since our common stock is not publicly traded, we considered
numerous objective and subjective factors in valuing our common
stock at each valuation date in accordance with the guidance in
the American Institute of Certified Public Accountants Practice
Aid Valuation of Privately-Held-Company Equity Securities
Issued as Compensation, or Practice Aid. These objective and
subjective factors included, but were not limited to:



arms-length sales of our common stock in privately
negotiated transactions;



valuations of our common stock;



our stage of development and financial position; and



our future financial projections.

On December 5, 2007, we acquired our predecessor for a
common stock price of $2.70 per share in connection with the
Spectrum investment. The Practice Aid indicates that a
third-party transaction between a willing buyer and a willing
seller is the best indication of the fair value of an
enterprise. At each grant date subsequent to the Spectrum
investment, our board of directors considered the objective and
subjective factors and determined that the $2.70 value was a
reasonable approximation of fair value until a new valuation was
performed in October 2008.

In the contemporaneous common stock valuations performed on
October 27, 2008, March 31, 2009 and June 30,
2009, the fair value of our common stock was determined by
taking the average value calculated under two different
valuation approaches, the income approach and market approach,
with each method weighted equally.



The income approach quantified the present value of the future
cash flows that management expected to achieve. These future
cash flows were discounted to their present values using a rate
corresponding to our estimated weighted average cost of capital.
The discount rate reflects the risks inherent in the cash flows
and the market rates of return available from alternative
investments of similar type and quality as of the valuation
date. Our weighted average cost of capital was calculated by
weighting the required returns on interest-bearing debt and
common equity capital in proportion to their estimated
percentages in our capital structure. The weighted average cost
of capital used in the common stock valuations on
October 27, 2008, March 31, 2009 and June 30,
2009 was 14.0%, 15.0% and 14.5%, respectively.



The market approach considered multiples of financial metrics
based on acquisition
and/or
trading multiples of a peer group of companies. These multiples
were then applied to our financial metrics to derive an
indication of value. The valuation on October 27, 2008
applied a weighting of 50% of the trailing twelve month
(TTM) earnings before interest, taxes, depreciation,
and amortization (EBITDA) and 50% of the forward
twelve month (FTM) EBITDA to indicate the value of
invested capital. The multiples used in the October 27,
2008 valuation for TTM EBITDA and FTM EBITDA were 7.7x and 5.5x.
The valuations on March 31, 2009 and June 30, 2009
applied a weighting of 10%, 40%, 10% and 40% to the TTM of
revenue, TTM of EBITDA, next full year (NFY)
revenue, NFY EBITDA, respectively. These multiples were:

Date of Valuation

TTM Revenue

TTM EBITDA

NFY Revenue

NFY EBITDA

March 31, 2009

2.0x

7.5x

1.9x

7.0x

June 30, 2009

2.2x

7.5x

2.0x

7.0x

The resulting fair value obtained by averaging the values
calculated under the income approach and the market approach was
then discounted for the lack of marketability of the common
stock for being a private company.

At each grant date from November 3, 2008 through
March 13, 2009, our board of directors considered objective
and subjective factors including the most recent contemporaneous
valuation of our common stock on October 27, 2008. Due to
the proximity of the grant on March 13, 2009 to the
March 31, 2009 valuation, we decided to use the
March 31, 2009 common stock valuation as fair value in our
SFAS 123(R) calculation of stock compensation expense for
the March 13, 2009 grants.

For the grants on May 27, 2009, our board of directors
considered objective and subjective factors including the most
recent contemporaneous valuation of our common stock on
March 31, 2009. The March 31, 2009 valuation was
higher than the October 27, 2008 valuation principally due
to the application of a much lower discount for marketability.
At the times of the prior valuation in October 2008 and grants
made from November 2008 through February 2009, our board of
directors believed that the likelihood of an initial public
offering in the near term was low, particularly given the
turmoil in the debt and equity capital markets and the
challenging economic environment during that period. The
discount for marketability in the March 2009 valuation was lower
as a result of various initial public filings being favorably
received, indicating a significant improvement in the market,
and our board of directors increased interest in pursuing a
public offering of our common stock in the nearer term.

For the grants on July 20, 2009, our board of directors
considered objective and subjective factors including the most
recent contemporaneous valuation of our common stock on
June 30, 2009. The June 30, 2009 valuation was higher
than the March 31, 2009 valuation principally due to an
increase in business enterprise value due to continued
improvements in the equity markets, and to a lesser extent the
company experiencing strong growth and cash flow.

Income taxes. We are subject to income taxes
in the United States and several foreign jurisdictions.
Significant judgment is required in evaluating our uncertain tax
positions and determining our provision for income taxes.
Financial Interpretation No. 48 (FIN 48) contains
a two-step approach to recognizing and measuring uncertain tax
positions accounted for in accordance with SFAS 109,
Accounting for Income Taxes. The first step is to
evaluate the tax position for recognition by determining if the
weight of available evidence indicates that it is more likely
than not that the position will be sustained on audit, including
resolution of related appeals or litigation

processes, if any. The second step is to measure the tax benefit
as the largest amount that is more than 50% likely of being
realized upon settlement.

Although we believe we have adequately reserved for our
uncertain tax positions, no assurance can be given that the
final tax outcome of these matters will not be different. We
adjust these reserves in light of changing facts and
circumstances, such as the closing of a tax audit, the
refinement of an estimate or changes in tax laws. To the extent
that the final tax outcome of these matters is different than
the amounts recorded, such differences will impact the provision
for income taxes in the period in which such determination is
made. The provision for income taxes includes the impact of
reserve provisions and changes to reserves that are considered
appropriate, as well as the related net interest.

In evaluating our ability to recover our deferred tax assets, in
full or in part, we consider all available positive and negative
evidence, including our past operating results, our forecast of
future market growth, forecasted earnings, future taxable income
and prudent and feasible tax planning strategies. The
assumptions utilized in determining future taxable income
require significant judgment and are consistent with the plans
and estimates we are using to manage the underlying businesses.
We believe it is more likely than not that the deferred tax
assets recorded on our balance sheet will ultimately be
realized. In the event we were to determine that we would not be
able to realize all or part of our net deferred tax assets in
the future, an adjustment to the deferred tax assets would be
charged to earnings in the period in which we make such
determination.

Our effective tax rates have differed from the statutory tax
rate primarily due to the tax impact of foreign operations,
certain impairment charges, state taxes, and certain benefits
realized related to stock option activity. The effective tax
rates were 36.1%, 44.2% and 43.6% for the year ended
December 31, 2006, the combined period ended
December 31, 2007 and the year ended December 31,
2008, respectively. Our future effective tax rates could be
adversely affected by changes in the valuation of our deferred
tax assets or liabilities, or changes in tax laws, regulations,
accounting principles or interpretations thereof. In addition,
we are subject to the continuous examination of our income tax
returns by the Internal Revenue Service and other tax
authorities. We regularly assess the likelihood of adverse
outcomes resulting from these examinations to determine the
adequacy of our provision for income taxes.

The following table sets forth, for the periods presented, our
consolidated statements of operations. The information contained
in the table below should be read in conjunction with our
consolidated financial statements and the related notes included
in this prospectus.

Predecessor

Successor

Successor

Period from

Period from

January 1,

December 6,

Combined

Year Ended

through

through

Period Ended

Year Ended

Six Months Ended

December 31,

December 5,

December 31,

December 31,

December 31,

June 30,

2006

2007

2007

2007

2008

2008

2009

(in thousands, except per share data)

(unaudited)

Revenues:

Subscription revenues

$

137,643

$

141,141

$

11,692

$

152,833

$

181,391

$

87,419

$

99,903

Product and other revenues

12,909

12,269

1,278

13,547

16,200

7,665

7,903

Total revenues

150,552

153,410

12,970

166,380

197,591

95,084

107,806

Costs of revenues:

Cost of subscription revenues

27,344

33,590

2,462

36,052

38,187

18,821

19,722

Cost of product and other revenues

3,695

2,552

500

3,052

5,427

1,887

2,824

Total cost of revenues

31,039

36,142

2,962

39,104

43,614

20,708

22,546

Gross profit

119,513

117,268

10,008

127,276

153,977

74,376

85,260

Operating expenses:

Technology and development

28,280

31,255

3,517

34,772

33,206

15,645

17,548

Marketing and advertising

51,421

42,400

3,157

45,557

52,341

24,571

29,986

General and administrative

26,978

20,723

2,142

22,865

28,931

13,864

14,340

Amortization of acquired intangible assets

2,216

2,132

1,542

3,674

23,779

11,886

8,113

Transaction related expenses



9,530



9,530







Total operating expenses

108,895

106,040

10,358

116,398

138,257

65,966

69,987

Income (loss) from operations

10,618

11,228

(350

)

10,878

15,720

8,410

15,273

Other income (expense):

Interest expense

(946

)

(756

)

(1,146

)

(1,902

)

(12,355

)

(6,204

)

(3,356

)

Interest income

2,238

2,051

289

2,340

872

431

698

Other income (expense), net

834

266

7

273

(8

)

1

10

Income (loss) before income taxes

12,744

12,789

(1,200

)

11,589

4,229

2,638

12,625

Income tax expense

(4,595

)

(5,018

)

(103

)

(5,121

)

(1,845

)

(1,399

)

(4,442

)

Net income (loss)

$

8,149

$

7,771

$

(1,303

)

$

6,468

$

2,384

$

1,239

$

8,183

Net income per common
share:(1)
Basic

$

0.03

$

0.02

$

0.11

Diluted

$

0.03

$

0.02

$

0.10

(1)

In connection with the Spectrum
investment, we were recapitalized. As a result, the capital
structure of our predecessor is not comparable to that of the
successor. Accordingly, net income per common share is not
comparable or meaningful for periods prior to 2008 and has not
been presented.

The following table sets forth, for the periods presented, our
consolidated statements of operations as a percentage of total
revenues. The information contained in the table below should be
read in conjunction with the consolidated financial statements
and the related notes included in this prospectus.

Predecessor

Successor

Successor

Period from

Period from

January 1,

December 6,

Combined

Year Ended

through

through

Period Ended

Year Ended

December 31,

December 5,

December 31,

December 31,

December 31,

Six Months Ended June 30,

2006

2007

2007

2007

2008

2008

2009

Revenues:

Subscription revenues

91.4

%

92.0

%

90.1

%

91.9

%

91.8

%

91.9

%

92.7

%

Product and other revenues

8.6

8.0

9.9

8.1

8.2

8.1

7.3

Total revenues

100.0

100.0

100.0

100.0

100.0

100.0

100.0

Cost of revenues:

Cost of subscription revenues

18.2

21.9

19.0

21.7

19.3

19.8

18.3

Cost of product and other revenues

2.4

1.7

3.8

1.8

2.8

2.0

2.6

Total cost of revenues

20.6

23.6

22.8

23.5

22.1

21.8

20.9

Gross profit

79.4

76.4

77.2

76.5

77.9

78.2

79.1

Operating expenses:

Technology and development

18.8

20.4

27.1

20.9

16.8

16.5

16.3

Marketing and advertising

34.1

27.6

24.4

27.4

26.5

25.8

27.8

General and administrative

17.9

13.5

16.5

13.8

14.7

14.6

13.3

Amortization of acquired intangible assets

1.5

1.4

11.9

2.2

12.0

12.5

7.5

Transaction related expenses



6.2



5.7







Total operating expenses

72.3

69.1

79.9

70.0

70.0

69.4

64.9

Income (loss) from operations

7.1

7.3

(2.7

)

6.5

7.9

8.8

14.2

Other income (expense):

Interest expense

(0.6

)

(0.5

)

(8.8

)

(1.1

)

(6.2

)

(6.5

)

(3.1

)

Interest income

1.5

1.3

2.2

1.4

0.4

0.5

0.6

Other income (expense), net

0.5

0.2

0.1

0.2

(0.0

)

0.0

0.0

Income (loss) before income taxes

8.5

8.3

(9.2

)

7.0

2.1

2.8

11.7

Income tax expense

(3.1

)

(3.2

)

(0.8

)

(3.1

)

(0.9

)

(1.5

)

(4.1

)

Net income (loss)

5.4

5.1

(10.0

)

3.9

1.2

1.3

7.6

Six
Months Ended June 30, 2008 and 2009

Revenues

Six Months Ended June 30,

% Change

2008

2009

2009 Over 2008

(in thousands)

(unaudited)

Subscription revenues

$

87,419

$

99,903

14.3

%

Product and other revenues

7,665

7,903

3.1

Total revenues

$

95,084

$

107,806

13.4

Subscription revenues. The increase in our
subscription revenues of $12.5 million in the six months
ended June 30, 2009 as compared to the six months ended
June 30, 2008 was primarily the result of an increase in
the number of total subscribers and to some extent an increase
in higher monthly revenue per subscriber. During the

six months ended June 30, 2009, changes in foreign
currency exchange rates had an unfavorable impact on
subscription revenues. Had average exchange rates remained the
same in the six months ended June 30, 2009 as average
exchange rates in effect in the six months ended June 30,
2008, our reported revenues in the six months ended
June 30, 2009 would have been approximately 4% higher.

Product and other revenues. Product and other
revenues were relatively unchanged in the six months ended
June 30, 2009 as compared to the six months ended
June 30, 2008.

Cost
of Revenues and Gross Profit

Six Months Ended June 30,

% Change

2008

2009

2009 Over 2008

(in thousands)

(unaudited)

Revenues:

Subscription revenues

$

87,419

$

99,903

14.3

%

Product and other revenues

7,665

7,903

3.1

Total revenues

$

95,084

$

107,806

13.4

Cost of revenues:

Cost of subscription revenues

18,821

19,722

4.8

Cost of product and other revenues

1,887

2,824

49.7

Total cost of revenues

20,708

22,546

8.9

Gross profit

$

74,376

$

85,260

14.6

Gross profit percentage

78.2

%

79.1

%

Cost of subscription revenues. The increase in
our cost of subscription revenues of $0.9 million in the
six months ended June 30, 2009 as compared to the six
months ended June 30, 2008 was primarily due to an increase
in web hosting costs of $0.5 million and an increase in
amortization of content costs of $0.4 million.

Cost of product and other revenues. The
increase in cost of product revenues of $0.9 million in the
six months ended June 30, 2009 as compared to the six
months ended June 30, 2008 was primarily due to an
$0.8 million increase in costs associated with our DNA
product resulting from increased volume in DNA sales driven by
our decision to sell our DNA product at reduced prices.

Operating
Expenses

Six Months Ended June 30,

% Change

2008

2009

2009 Over 2008

(in thousands)

(unaudited)

Operating Expenses:

Technology and development

$

15,645

$

17,548

12.2

%

Marketing and advertising

24,571

29,986

22.0

General and administrative

13,864

14,340

3.4

Amortization of acquired intangible assets

11,886

8,113

(31.7

)

Total operating expenses

$

65,966

$

69,987

6.1

Technology and development. The increase in
technology and development expenses of $1.9 million for the
six months ended June 30, 2009 as compared to the six
months ended June 30, 2008, was primarily the result of
increased personnel-related costs of $2.0 million due to an
increase in the number of technology and development personnel
at June 30, 2009 as compared to June 30, 2008.

Marketing and advertising. The increase in
marketing and advertising expenses of $5.4 million in the
six months ended June 30, 2009 as compared to the six
months ended June 30, 2008 was primarily attributable to
$4.1 million increase in television and online advertising,
as well as an increase of $1.0 million in personnel-related
costs resulting from an increase in the number of marketing and
advertising personnel at June 30, 2009 as compared to
June 30, 2008.

General and administrative. The increase in
general and administrative expenses of $0.5 million for the
six months ended June 30, 2009 as compared to the six
months ended June 30, 2008, was the result of increased
personnel-related costs of $1.2 million, due to an increase
in the number of general and administrative personnel. This was
offset by a change in foreign currency gains and losses of
$0.9 million from a loss of $0.3 million in the six
months ended June 30, 2008 to a gain of $0.6 million
in the six months ended June 30, 2009.

Amortization of acquired intangible
assets. The decrease in amortization of acquired
intangible assets of $3.8 million in the six months ended
June 30, 2009 as compared to the six months ended
June 30, 2008 was due to the amortization of our subscriber
relationship asset, which is amortized on an accelerated basis.
The subscriber relationship asset was recorded in connection
with the Spectrum investment.

Other
Income (Expense) and Income Tax Expense

Six Months Ended June 30,

% Change

2008

2009

2009 Over 2008

(in thousands)

(unaudited)

Other income (expense):

Interest expense

$

(6,204

)

$

(3,356

)

(45.9

)%

Interest income

431

698

61.9

Other income, net

1

10

n/m

Income tax expense

(1,399

)

(4,442

)

217.5

Other data:

Effective tax rate

53.0

%

35.2

%

Interest expense on debt. The decrease in
interest expense of $2.8 million in the six months ended
June 30, 2009 as compared to the six months ended
June 30, 2008 was due to a decrease in our effective
interest rate from 8.2% to 4.1% and a lower level of debt.

Provision for income taxes. The decrease in
the effective tax rate from 53.0% in the six months ended
June 30, 2008 to 35.2% in the six months ended
June 30, 2009 is primarily due to state and foreign income
taxes and expenses related to stock options that are not
deductible for income tax purposes.

To facilitate a comparison of our annual results, we combined
the predecessor and successor periods in 2007 into a combined
2007 presentation, as we believe this combination is useful to
provide the reader a more meaningful comparison of our annual
periods. This combination is not a United States GAAP measure
and it is provided to enhance the readers understanding of
the results of operations for the periods presented.

Revenues

Year Ended December 31,

% Change

Combined

2007 Over

2008 Over

2006

2007

2008

2006

2007

(in thousands)

Subscription revenues

$

137,643

$

152,833

$

181,391

11.0

%

18.7

%

Product and other revenues

12,909

13,547

16,200

4.9

19.6

Total revenues

$

150,552

$

166,380

$

197,591

10.5

18.8

Subscription
revenues

2007 compared to 2008. The increase in our
subscription revenues of $28.6 million in 2008 as compared
to 2007 was primarily the result of an increase in the number of
total subscribers and also to an increase in monthly revenue per
subscriber. Foreign currency exchange rates did not have a
material impact on our revenues in 2008 compared to 2007.

2006 compared to 2007. The increase in our
subscription revenues of $15.2 million in 2007 as compared
to 2006 was primarily the result of an increase in the number of
total subscribers. Foreign currency exchange rates had a nominal
beneficial effect on our revenues in 2007 compared to 2006.

Product
and other revenues

2007 compared to 2008. The increase in our
product and other revenues of $2.7 million in 2008 as
compared to 2007 was due to, among other things, a
$2.4 million increase in our DNA product revenues, a
$1.3 million increase in our advertising services and a
$0.7 million increase in sales of our MyCanvas.com
products. This increase was offset by a $1.6 million
decrease in sales of our legacy products (e.g., CD ROMs, books,
posters). Our DNA product was released in the fourth quarter of
2007.

2006 compared to 2007. The increase in our
product and other revenues of $0.6 million in 2007 as
compared to 2006, was primarily due to $0.9 million from
the expansion of our advertising services, $0.4 million
from the launch of our DNA product and $0.6 million from a
new release of our Family Tree Maker software. This increase was
offset by a decrease in sales of our legacy products of
$1.4 million.

2007 compared to 2008. Cost of subscription
revenues increased $2.1 million in 2008 as compared to 2007
primarily due to the impairment of database content costs of
$1.5 million in 2008 and an increase in database content
amortization, merchant fees and web hosting costs of
$2.1 million, partially offset by decreases in
personnel-related costs of $0.9 million and royalty
expenses of $0.6 million. The impairment of database
content costs was a result of a change in our strategy for our
Chinese content.

2006 compared to 2007. Cost of subscription
revenues increased $8.7 million in 2007 as compared to
2006. The increase is primarily due to the change in the
operations of our call center from a sales based organization to
a subscriber support organization beginning January 1,
2007. The majority of the costs associated with the call center
prior to January 1, 2007 were recorded in marketing and
advertising expense and the majority of the costs associated
with the call center subsequent to January 1, 2007 were
recorded in cost of subscription revenues. This change resulted
in an increase in cost of subscription revenues of
$5.7 million, although call center costs in total decreased
by $7.7 million. Additionally, database hosting and support
costs increased $3.9 million due to increased database
content amortization and web hosting support costs associated
with adding new database content, and merchant fees of
$0.6 million. These increases were offset by a
$2.8 million decrease in royalty expenses due to the
termination of a royalty agreement in 2006.

Cost of
product and other revenues

2007 compared to 2008. Cost of product and
other revenues increased by $2.4 million in 2008 as
compared to 2007, primarily due to $2.2 million related to
the introduction of our DNA product and $0.3 million
related to the introduction of our MyCanvas.com products. Cost
of product and other revenues as a percentage of total revenue
increased due to our decision to sell our DNA product at a
reduced price.

2006 compared to 2007. Cost of product and
other revenues decreased by $0.6 million in 2007 as
compared to 2006 primarily due to a $0.8 million decrease
related to the discontinuation of our full service genealogy
product in the fourth quarter of 2006, a $0.5 million
decrease in revenues and related cost of revenues from our
legacy products offset by increases of $0.3 million from to
the introduction of our DNA product and $0.3 million due to
the introduction of our MyCanvas.com products.

2007 compared to 2008. The decrease in
technology and development expenses by $1.6 million for
2008 as compared to 2007 was primarily the result of a one-time
in-process research and development charge of $1.3 million
in 2007 related to the Spectrum investment in 2007, as well as a
decrease in personnel-related costs of $1.8 million due to
a decrease in development headcount. This decrease was partially
offset by increases in third-party development expense of
$0.9 million to compensate for the decrease in development
headcount and stock-based compensation of $0.8 million.

2006 compared to 2007. The increase in
technology and development expenses by $6.5 million for
2007 as compared to 2006 was primarily the result of an increase
in personnel-related costs of $2.5 million due to growth in
headcount, increases in third party development expense of
$1.6 million due to our efforts to enhance our Ancestry and
myfamily.com websites and a one-time charge for in-process
research and development of $1.3 million related to the
Spectrum investment.

Marketing
and advertising

2007 compared to 2008. The increase in
marketing and advertising expenses of $6.8 million in 2008
as compared to 2007 was primarily driven by an increase in
television and online advertising in both domestic and
international markets.

2006 compared to 2007. The decrease in
marketing and advertising expense of $5.9 million in 2007
as compared to 2006 resulted primarily from the change of our
call center from a sales organization to a subscriber support
organization. The majority of the costs associated with the call
center prior to January 1, 2007 were recorded in marketing
and advertising expense; and the majority of the costs
associated with the call center subsequent to January 1,
2007 were recorded in cost of subscription revenues. This change
resulted in a decrease in marketing and advertising expense of
$12.3 million in 2007 as expenses related to our call
center were shifted to cost of subscription revenues. In the
aggregate, the costs related to our call center decreased
$7.7 million in 2007 as headcount in the call center was
decreased substantially. The overall $12.3 million decrease
in marketing and advertising expenses was partially offset by an
increase in external marketing and advertising spending of
$5.9 million in 2007 compared to 2006, primarily due to our
television marketing spend in the United States. Our
subscriber additions were 569,851 in 2006, principally driven by
the airing of Who Do You Think You Are? in the
United Kingdom, and 479,663 in 2007. The result of the
higher external spend in the United States related to the launch
of a television-based brand campaign, combined with fewer
subscriber additions in the United Kingdom, caused
subscriber acquisition cost to increase from $49.29 in 2006 to
$70.96 in 2007.

2007 compared to 2008. The increase in general
and administrative expenses of $6.1 million in 2008 as
compared to 2007 was the result of an increase in stock-based
compensation of $2.9 million, driven primarily from new
stock option grants in 2008, an increase in personnel-related
costs of $2.5 million, due to additional administrative
personnel, and increased professional fees of $0.9 million.

2006 compared to 2007. The decrease in general
and administrative expenses of $4.1 million in 2007 as
compared to 2006 resulted from a one-time expense related to a
royalty termination payment in 2006 of $3.3 million and a
decrease in stock-based compensation of $3.0 million. This
decrease was partially offset by an increase in rent expense of
$0.9 million due to the closure of our former call center
facility and a full year of rent expense related to our
headquarters facility after the sale and leaseback of our
headquarters facility in 2006, and an increase in professional
fees of $0.8 million.

Amortization
of acquired intangible assets

2007 compared to 2008. The increase in
amortization of acquired intangible assets (subscriber
relationships and contracts, core technologies, trademarks and
trade names) of $20.1 million in 2008 as compared to 2007
was due to the Spectrum investment in December 2007, which
resulted in an increase in amortizable intangible assets.

2006 compared to 2007. The increase in
amortization of acquired intangible assets of $1.5 million
in 2007 as compared to 2006 was due to the Spectrum investment
in December 2007, which resulted in an increase in amortizable
intangible assets. The increase represents one month of
amortization on the acquired intangible assets.

Transaction related expenses. In 2007, we
recorded $9.5 million of legal, accounting and other
expenses related to the Spectrum investment.

Other
Income (Expense) and Income Tax Expense

Year Ended December 31,

% Change

Combined

2007 Over

2008 Over

2006

2007

2008

2006

2007

(in thousands)

Other income (expense):

Interest expense

$

(946

)

$

(1,902

)

$

(12,355

)

101.1

%

549.6

%

Interest income

2,238

2,340

872

4.6

(62.7

)

Other income (expenses), net

834

273

(8

)

(67.3

)

n/m

Income tax expense

(4,595

)

(5,121

)

(1,845

)

11.4

(64.0

)

Other data:

Effective tax rate

36.1

%

44.2

%

43.6

%

Interest
expense

2007 compared to 2008. Our interest expense
increased in 2008 as compared to 2007 as a result of increased
level of long-term debt. In December 2007, in connection with
the Spectrum investment, we entered into a credit facility with
a syndicate of lenders that included a term loan of
$140 million. Prior to this arrangement we had
$15 million in long-term debt.

2006 compared to 2007. Our interest expense
increased in 2007 as compared to 2006 as a result of increased
level of long-term debt. In December 2007, in connection with
the Spectrum investment, we entered into a credit facility with
a syndicate of lenders that included a term loan of
$140 million. Prior to this arrangement we had
$15 million in long-term debt. The increase represents one
month of interest at the increased debt level.

Interest
income

2007 compared to 2008. The decrease in
interest income in 2008 as compared to 2007 was due to a
decrease in the cash balance in 2008 as a result of the Spectrum
investment.

2006 compared to 2007. Interest income was
essentially flat in 2007 compared to 2006 as our cash balance
remained relatively consistent.

Other
income (expense), net

2007 compared to 2008. Other income in 2007
primarily relates to the sale of our Heritage Makers subsidiary
at a gain. We did not have any similar events in 2008.

2006 compared to 2007. Other income in 2006
and 2007 primarily relates to gains realized from the sale of
our A-Ha subsidiary in 2006 and gains realized from the sale of
our Heritage Makers subsidiary in 2007.

Income
tax expense

Income tax expense for the year ended December 31, 2008 was
$1.8 million. Our effective tax rate differed from the
federal statutory rate of 35% principally due to state and
foreign income taxes and other non-deductible items.

Income tax expense for the combined period ended
December 31, 2007 was $5.1 million. In 2007, our
effective tax rate differed from the federal statutory rate of
35% principally due to state and foreign income taxes and non
deductible expenses associated with the Spectrum investment.

Income tax expense for the year ended December 31, 2006 was
$4.6 million. In 2006 our effective tax rate differed from
the federal statutory rate of 35% principally due to state
income taxes.

The following table presents our unaudited quarterly
consolidated results of operations for the six quarters ended
June 30, 2009. This unaudited quarterly consolidated
information has been prepared on the same basis as our audited
consolidated financial statements, and, in the opinion of
management, the statement of operations data includes all
adjustments, consisting of normal recurring adjustments,
necessary for the fair statements of the results of operations
for these periods. You should read this table in conjunction
with our financial statements and the related notes located
elsewhere in this prospectus. The results of operations for any
quarter are not necessarily indicative of the results of
operations for any future periods.

The following table presents our unaudited quarterly
consolidated results of operations for the six quarters ended
June 30, 2009 as a percentage of revenues. You should read
this table in conjunction with our consolidated financial
statements and the related notes located elsewhere in this
prospectus.